Legal Forms of Business Essay Example | Topics and Well Written Essays - 500 words

Legal Forms of Business - Essay Example In addition, where a single person can raise entire capital required to start a business in which he/she is the central service provider and wants full control. A partnership would be appropriate if the business’ ownership lies with a family or if capital contribution is done by more than one person (Ennico, 2010). Partnerships are typical in instances where the entity’s business line is not risky enough to warrant a more complex model. Limited liability partnerships are recommendable for small businesses that start off with one person or company as the owner but the need to expand by soliciting investments from other persons or companies. These new entrants are referred to as limited partners as their liabilities are limited to the business entity since they have no control of business operations. In such a scenario, the business’ daily operations are run by a general partner who is, therefore, liable for business debt unless the general partner is a company. Limited liability companies, on the other hand, are suitable for persons wishing to set up a business entity where owners’ liability for business debts and court judgements made against the company. This business form is appropriate for persons or companies that require a separate legal and tax entity from the owners , hence owners file their personal taxes from salaries and bonuses earned by the company (Mitchell, 2009). This is the most suitable form in instances where owners have massive assets that they wish to protect from business creditors, or the business conducted by the company is risky to warrant constant law suits from customers. S corporations would be suitable in instances where shareholders or owners would like to receive salaries that are considered â€Å"reasonable† by law. S corporations can also be set up when owners wish to make additional funds because funds retained by the entity after paying its