Business Formation

May 26th, 2016
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California International Business University
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This document mainly focuses on forms of business formation capturing very well their advantages and disadvantages against each other and also will help you to understand the recommendation on which one to choose against which.

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Running Head: Business FormationAccountingStudent nameInstitution of learningRunning Head: Business FormationBUSINESS FORMATIONA partnership is defined as the relationship which exists between persons carrying on abusiness in common with a view of making profits. There are three types of partnership whichare general partnership, Limited partnership and Limited liability partnership.A general partnership have got three essential elements to the general partnership. Theseelements are; A joint ownership of business, Sharing of losses and profits and Equal right of themanagement of the business.There some advantages and disadvantages involved in partnership. (Braagg, 2015).Advantages of Partnership are several one being that business dont have to necessary pay tax,every partner do files profits and losses of the business on their own personal tax. Secondly itsvery easy to establish partnership. Another thing is that when owners are more than one, there isan increased ability to for them to raise funds. In addition, Skills and knowledge and alsocontacts are pooled together. Lastly, since owners are more than one management is improved.Disadvantages of partnerships are quite a number also. One of them is that a Limited partner maycarry liabilities of a general partner personal liabilities Secondly, a general partner is the one whois fully liable to any debt of the business. Again Limited partnership certificate should be filledbefore the partnership c

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