Question

Business Ventures - Part 1 Directions 1. Create a list of possible business ventures. 2. Now, you need to choose a legal form of business ownership. Once you've chosen, list the advantages and disadvantages of the one you selected.

Answer 1

I'm thinking about three different businesses which I would be able to start on my own:

1. A small landscaping business that would be organized as a sole proprietorship. Since the business is relatively small, and I will actively participate in it along with a few other employees, I do not need any partners. The advantage of this business is that I have complete control and it is really easy to set up. The main disadvantage is that I'm personally liable for the company's obligations.
2. The second type of business would be an accounting firm. This is a little more complex, and required more capital. Therefore, I need to associate with a couple of friends. This would result in a limited liability partnership, which is a separate entity (no personal liability). The IRS considers LLP as pass through entities, so we will not be double taxed as a corporation. The disadvantage is that my friends and I will have to learn to work together and solve normal work related problems without ending our partnership and our friendship.
3. If I get really ambitious, I could try to set up an investment firm. Since I'm not a millionaire, I would need to form a corporation. The main advantages of a corporation are that you can raise more money and no personal liability. But the disadvantages are double taxation and less control on the company's operations.