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Here are the most common options and their major defining characteristics. Sole Proprietorship The default option is to be a sole proprietor. With this option there are fewer forms to file than with other business organizations. The business is structured in such a manner that legal documents are not required to determine how profit-sharing from business operations will be allocated.
Being a sole proprietor does not preclude you from using a business name that is different from your own name, however.
In a sole proprietorship all profitslosses, assets and liabilities are the direct and sole responsibility of the owner. Also, the sole proprietor will pay self-employment tax on his or her income. Sole proprietorships are not ideal for high-risk businesses because they put your personal assets at risk.
Nolo, a company whose educational books make legal information accessible to the average person, gives several examples of risky businesses, including businesses that involve child care, animal care, manufacturing or selling edible goods, repairing items of value, and providing alcohol.
These are just a few examples.
There are many other activities that can make your business high risk. If the risks in your line of work are not very high, a good business insurance policy can provide protection and peace of mind while allowing you to remain a sole proprietor. One of the biggest advantages of a sole proprietorship is the ease with which business decisions can be made.
There are situations where an LLC owner can still be held personally responsible, such as if he intentionally does something fraudulent, reckless or illegal, or if she fails to adequately separate the activities of the LLC from her personal affairs.
This structure is established under state law, so the rules governing LLCs vary depending on where your business is located. An LLC must elect to be taxed as an individual, partnership or corporation.
In some states, there is an additional annual fee for being an LLC. You will also need to name your LLC and file some simple documents, called articles of organization, with your state.
You may also have to publish a notice in your local newspaper stating that you are forming an LLC. Corporation Like the LLC, the corporate structure distinguishes the business entity from its owner and can reduce liability.
However, it is considered more complicated to run a corporation because of tax, accounting, record keeping and paperwork requirements. Unless you want to have shareholders or your potential clients will only do business with a corporation, it may not be logical to establish your business as a corporation from the start - an LLC may be a better choice.
The steps for establishing a corporation are very similar to the steps for establishing an LLC. Find out how becoming a corporation can protect and further your finances.
There are two types of corporations: C corporations C corps and S corporations S corps. C corporations are considered separate tax-paying entities. Corporate income is often taxed at lower rates than personal income, so you can save money on taxes by leaving money in the corporation.
If the corporation has shareholders, corporate earnings become subject to double taxation in the sense that income earned by the corporation is taxed and dividends distributed to shareholders are also taxed. The shareholders report these items on their personal income tax returns, thus S corps avoid the income double taxation that is associated with C corps.
All shareholders must sign IRS form to make the business an S corp for tax purposes. The IRS also requires S corps to meet the following requirements: Be a domestic corporation Have only allowable shareholders, including individuals, certain trusts and estates Not include partnerships, corporations or non-resident alien shareholders Have no more than shareholders Have one class of stock Not be an ineligible corporation i.
In a general partnershipall partners are personally liable for business debts, any partner can be held totally responsible for the business and any partner can make decisions that affect the whole business. In a limited partnershipone partner is responsible for decision-making and can be held personally liable for business debts.
The other partner merely invests in the business. Although the general structure of limited partnerships can vary, each individual is liable only to the extent of their invested capital.
LLPs are most commonly used by professionals such as doctors and lawyers. Different states have varying regulations regarding these establishments of which business owners must take note.
Partnerships must file information returns with the IRS, but they do not file separate tax returns.Nov 06, · Organizational behavior theory usually represents concepts that help a company create better management practices. In some cases, these theories can mean the creation of a structure in the business; in other cases, it may be training personnel for different activities.
The most common types of organizational behavior include classical, contingency, and systems, among others.
Summary of Organizational Theories 3 C School: Classical Organization Theory (p. 31). C Time Line: Essentially introduced with the origins of commerce, largely shaped the industrial revolution, “dominated organization theory into the s and remains highly influential today” (p.
32). Organizational analysis: Organizational analysis, in management science, the study of the processes that characterize all kinds of organizations, including business firms, government agencies, labour unions, and voluntary associations such as sports clubs, charities, and political parties.
Any organization . Macro organizational theory studies whole organizations and industries, including how they adapt, and the strategies, structures, and contingencies that guide them.
Concepts such as leadership, decision making, team building, motivation, and job satisfaction are all facets of organizational behavior and responsibilities of management. Organizational theory can also help identify malicious forms of corporate practice and use them to highlight future precautionary measures.
The nuclear accident at Three Mile Island helped determine ways to ensure the prevention of similar incidents. Forms of Business Organization Western Governors University The study of business organization is a study of complexity: as each business is different, each form of business organization is also unique.