| It would be crazy to write business articles without | | | | In a limited partnership, limited partners are protected |
| examining the differing formats of business available. | | | | from the full extent of their investment. The limited |
| Why do businesses exist? | | | | form is used to protect investing partners that do |
| In a financier's eyes, the sole purpose of the business | | | | not participate in the management of the business. |
| is to increase the wealth of the owner's as far as | | | | Limited Companies |
| possible. In the chasing of wealth, people can | | | | These are separate legal entities from the individuals |
| organise the business in several different ways. | | | | that own them. In the eyes of the law, a limited |
| There are three basic legal business structures that | | | | company is treated as another individual who |
| organisations take on normally. Each is chosen | | | | conducts his or her business. The assets and liabilities |
| depending on the complexity of the business, liability | | | | of the company are owned by the company and not |
| preference and tax considerations of the owners. | | | | by the owners. In the case of bankruptcy, the |
| Sole trader | | | | owner's personal assets are shielded from creditors. |
| This is a business owned by an individual or husband | | | | The company's ownership is split into shares of stock |
| and wife. The owner retains all the profits and carries | | | | that investors can purchase. When management |
| unlimited liability for all losses. If things go poorly, the | | | | decides that the company needs more money, |
| owner's personal assets can be seized. It is the most | | | | additional shares can be issued and any investor is |
| similar form of business and as with, for example, a | | | | personally protected from any liabilities of the |
| simple burger stall no special government registration | | | | company. |
| is required. Earnings are simply added to the owner's | | | | A drawback is that that the company is double taxed |
| personal income and taxes are paid on the total | | | | in that the dividend is taxed along with the individuals. |
| income. However, because it is not a separate legal | | | | Within the limited form, there are two variations, the |
| entity that can be sold in pieces, it is more difficult | | | | C Corp and the Subchapter S Corp, which has thirty |
| for a sole trader to raise money in the financial | | | | five or fewer owners who agree to include the |
| markets. | | | | company's earnings as in a partnership. This way the |
| Partnerships | | | | double taxation aspect does not fall on the owners |
| When several people get together and form a | | | | and the firm's limited liability advantage is maintained. |
| business, they often enter into a partnership. As in a | | | | Within investment, there are two main routes one |
| sole trader, each owner's share of the earnings is | | | | can take. There is the investment area where |
| included in his or her personal tax returns. Depending | | | | headlines are made and there is financial management |
| on the nature of the business, there are two main | | | | which is the work that helps companies pay the bills |
| types of partnership. For example, in a general | | | | and make acquisitions. |
| partnership the general partners have unlimited liability | | | | Thus ends a very brief summary of business |
| for all business debts. | | | | formats. |