Organizational Types and Considerations FOR A SMALL BUSINESS

Organizational Types and Considerations FOR A SMALL BUSINESS

Organizational Types and Considerations FOR A SMALL BUSINESS Welcome 1. Agenda 2. Ground Rules 3. Introductions ORGANIZATIONAL TYPES and CONSIDERATIONS 2

Objectives Identify general characteristics, advantages, and disadvantages of each of these organizational types for small businesses: Sole Proprietorship Partnerships Limited Liability Company (LLC) C-corporation S-corporation ORGANIZATIONAL TYPES and CONSIDERATIONS

3 What Do You Know? What do you know or want to learn about organizational types for small businesses? ORGANIZATIONAL TYPES and CONSIDERATIONS 4 Organizational Types

What are the 5 common organizational types (also called legal structures)? Sole Proprietorship Partnership (general, limited, & LLP) Limited Liability Company (LLC) C-corporation S-corporation Continued ORGANIZATIONAL TYPES and CONSIDERATIONS 5

Factors for Choosing an Organizational Type Taxation Taxes on profits are paid through personal tax returns except for corporations Liability and Risk Responsibility for harm to another person or property, or contract disputes Management Decision-making authority Continuity and Transferability How a business persists and how it is sold Expense and Formality Costs, legal responsibility, degree of complexity

ORGANIZATIONAL TYPES and CONSIDERATIONS 6 Discussion Point #1: Organizational Factors Which organizational factors have the most impact on your business? ORGANIZATIONAL TYPES and CONSIDERATIONS 7

Sole Proprietorship Business is one and the same as the owner Advantages and Disadvantages Owner has unlimited personal liability Pass-through taxes personal tax return Owner controls business Simplest form of organization Lowest cost to form Appropriate for small start-up ORGANIZATIONAL TYPES and CONSIDERATIONS

8 General Partnership Business association of two or more people Advantages and Disadvantages Owners have personal liability Pass-through taxation Shared risk and costs Simple to form, low cost Create a

partnership agreement ORGANIZATIONAL TYPES and CONSIDERATIONS 9 Limited Partnerships and Limited Liability Partnerships Advantages and Disadvantages General and limited partners general partner runs business Pass-through taxation Requires a partnership agreement

Liability will depend on the type of partner (general or limited) ORGANIZATIONAL TYPES and CONSIDERATIONS 10 Limited Liability Company Unincorporated hybrid entity, with traits (LLC) of corporation & gen. partnership (or sole prop.) Advantages and Disadvantages Greater flexibility than sole proprietorship and partnership in

distributing profits (less restrictive than S-corporation) Limited liability like corporation Pass-through taxation like sole proprietorship or partnership ORGANIZATIONAL TYPES and CONSIDERATIONS 11 Corporation Legal entity, created under the laws of a state, which has its own privileges and liabilities distinct from those of its members

Types: C-corporation S-corporation Most businesses DO NOT need to incorporate ORGANIZATIONAL TYPES and CONSIDERATIONS 12 C-Corporation Also called regular corporation (most common for larger companies)

C Advantages and Disadvantages Limited liability Company is taxed (double taxation an issue) Complex to form Complex ownership and management Appropriate for a few specific reasons otherwise, choose another organizational type

ORGANIZATIONAL TYPES and CONSIDERATIONS 13 S-Corporation Owner has limited liability of a corporate shareholder but pays income tax like a sole proprietor or partner S Advantages and Disadvantages Same as C-corporation except

for pass-through taxation ORGANIZATIONAL TYPES and CONSIDERATIONS 14 Choosing an Organizational How Typedo I decide which structure is best for my business? Establish business plan, think about business Initial guidelines: Owner-operator?

Partnership? Multiple owners? Product with significant liability? Large venture with multiple owners and complex financing? Ask attorney Research through Small Business ORGANIZATIONAL TYPES and CONSIDERATIONS 15 Discussion Point #2: Your Organizational Type Which organizational type will be right for you and your new business?

ORGANIZATIONAL TYPES and CONSIDERATIONS 16 Five Key Points to Remember The organization type impacts how you own and run your business Match your legal structure to business needs i.e., Tax, Liability, Management, Continuity and Expense Most common small business type: Sole Proprietorship is same as the owner A Partnership includes pass through taxation and personal liability

A business plan is the best way to determine the organizational structure right for your business ORGANIZATIONAL TYPES and CONSIDERATIONS 17 Summary What final questions do you have? What have you learned? How would you evaluate the training? ORGANIZATIONAL TYPES and CONSIDERATIONS 18

Conclusion You learned about: Five organizational types (legal structures) Their characteristics, advantages, and disadvantages Choosing an organizational type ORGANIZATIONAL TYPES and CONSIDERATIONS 19

Recently Viewed Presentations

  • Microeconomic Theory - Eiu

    Microeconomic Theory - Eiu

    Times New Roman Arial Wingdings Symbol Network Microsoft Equation 3.0 Production Function Marginal Physical Product Diminishing Marginal Productivity Average Physical Product A Two-Input Production Function A Two-Input Production Function A Two-Input Production Function A Two-Input Production Function Isoquant Maps Isoquant...
  • Lexmark Solution Builder Toolkit (SBT) 4.3

    Lexmark Solution Builder Toolkit (SBT) 4.3

    Processes, Tools, & Best Practices My Background Lexmark Software Development for 15 years ('93 - '08) Multi-tier Java application servers Window s printer drivers Windows applications Java, C, C++, Visual Basic, Perl, PHP IBM co-op in Raleigh, NC for 2...
  • The Office, Procedures and Technology

    The Office, Procedures and Technology

    Monthly Labor Review. Topic 2-1 Office Competencies Needed for Employment The . Handbook. is available online at the U.S. Dept. of Labor Web site. ... World Wide Web. Diversity. E-zine. Slide . Slide . Company Goals. Relate to making profits...
  • Journal Club - Boston University Medical Campus

    Journal Club - Boston University Medical Campus

    Preceptor: Dr. David Coleman ... No Rx - 33 people died (24 sudden cardiac deaths/ 1 million 5-day periods) Among highest CV risk group, 245 / 1 million tx courses Azithromycin and CV Death Cautions: Relative risk vs. absolute risk...
  • Classification Taxonomy

    Classification Taxonomy

    Rules of the Game. Uniqueness: Every name has to be unique. Universality: Zoologists have adopted, by international agreement, a single language to be used on a worldwide basis. All animals are given a generic (common name) and specific name in...
  • Christmas Tree Hill Neighborhood Response Group

    Christmas Tree Hill Neighborhood Response Group

    STEP 7: LEARN HOW TO USE YOUR 2-WAY RADIO CORRECTLY. There is a monthly radio test for all BCs. Learning the basic operating guidelines for the use of two way radios is something which is extremely important prior to use....
  • The Black, Minority and Ethnic Student Experience at a Small ...

    The Black, Minority and Ethnic Student Experience at a Small ...

    The Black, Minority and Ethnic Student Experience at a Small Northern University. Chantal Davies and Caroline Chappell (University of Chester) Introduction. Background. ... Exploration of experiences of BME students within the research site.
  • Viking Clothing Mens Dress A woolen cloak was

    Viking Clothing Mens Dress A woolen cloak was

    Viking Clothing Men's Dress A woolen cloak was fastened by a brooch A shirt of wool or linen was fastened with a leather belt Trousers could be knee-length or ankle length Leather shoes needed tough soles Warrior Dress The Viking...