Regulatory requirements are generally light with only state filing required for registration, tax forms such as 1040 need to be completed annually and estimated taxes paid quarterly. Financial statements are not generally required unless applying for loans or other external financing. Advantages: • Easy Setup – Low startup costs, few regulations and paperwork involved in setting up a Sole Proprietorship compared to larger entities like LLCs or Corporations. • Tax Advantages-Profits earned by the business pass directly through to the owners who reports them on their personal income taxes resulting in potentially lower overall tax rate when combined with personal deductions than if taxed at corporate rates. Disadvantages: • Unlimited Liability – Unlike LLCs or Corporations, Sole Proprietorships offer no legal protection to its owners from lawsuits/debts incurred by the business leaving them personally liable for any losses incurred by it . • Lack Of Continuity - Ownership terminates upon death so there can be some difficulty transferring ownership without significant downtime of operations which could affect profitability negatively . Partnership : A partnership is an agreement between two or more individuals who share ownership in a company known as “general partners” . All general partners jointly own the profits and debts incurred by the partnership while having shared responsibility for decision making within it . There may also exist limited partners who invest capital into the entity but have no say in decision making while receiving part of any profit earned related only to their investment amount . Regulatory requirements vary based on state but typically involve a formal agreement between all parties detailing rules regarding management , splits of profits/losses etc., filing annual reports/tax returns etc.. Financial statements such as balance sheets , income statements would need to be prepared along with filing taxes at both corporate and personal level depending on how earnings are distributed amongst partners .. Advantages:  • Flexibility- Partnerships allow flexibility among members over how decisions should be made according what works best for everyone vs strict corporate structure being followed where decisions may be dictated from top down                                      • Profitability Sharing - As opposed to corporations where profits are taxed at separate entity level before being split amongst shareholders partnerships can choose either taxable approach (splitting after taxation) or nontaxable one(splitting pre-tax). This allows greater ability customize distribution according needs/desires allowing potential increase profitability                                                                                        Disadvantages: • Shared Responsibility – Each partner is jointly responsible every other partner’s actions including any debts they incur so even if one partner runs into financial trouble entire enterprise could suffer repercussions                          • Difficulty Securing Funding - Due potential high risk associated with multiple decision makers there can often times difficulty securing financing from external sources that may require single individual guarantee loan repayment Limited Liability Company (LLC): An LLC combines aspects of Corporation (separate legal entity) and Partnership(flexible operating style ) giving owners more options when deciding how operate their business without being limited traditional structures associated with each type organization . All owners known as ‘members’ share same rights liabilities regardless size respective holdings meaning each member individually liable only amounts invested into LLC itself no matter what action taken behalf another member.. For regulatory purposes depends largely state which specific documents must filed order register set up , however almost always required submit Articles Organization containing relevant information about company such name address etc certain states will require additional filings know ‘public records’... Financially speaking companies limited liability status means they treated similar corporation terms preparing financial statements (ie balance sheet, income statement .) however unlike Corp they don file federal tax return instead distributing reported income amongst members based whatever operating agreement been established during setup process......       Advantages: • Limited Liability Protection– Members given protection against creditors sue particular person instead going after entire businesses assets protecting individual property wealth event gets sued....... • Pass Through Taxation– Profits generated get passed onto members without having first pay federal income taxes separately highest marginal rate applied each time funds dispersed.... Disadvantage : • Complex Regulations – Depending heavily upon jurisdiction many complex rules regulations governing establishment running LLC much higher than running sole proprietor example.... • Increased Cost Upkeep– Generally because variety legal protections afforded both members well public increased cost keeping books doing paperwork necessary maintain good standing..... Corporation : A corporation organized under applicable laws giving shareholders right buy sell stock arrange meetings vote board directors elect officers transact regular activities legally separate themselves individual people behind concept shares issued investors traded open market entitling each holder percentage voting power ..Regulatory wise companies fall jurisdiction Securities Exchange Commission closely monitor publicly traded stocks particularly those listed NYSE NASDAQ requiring various filings reports disclosure documents comply securities laws ...Financially speaking corporations expected produce audited financial statements consisting balance sheet cash flow statement yearly basis show accurate reflection performance independent auditor review ensure accuracy .... Advantages :    • Separate Legal Entity Status – One main advantages corporations fact allowed act its own entity conducting activities treating responsibilities differently than actual people behind idea reducing chances lawsuit reaching businesses shareholders especially publicly traded ones ......        • Ability Attract Investors & Borrow Money Easily - Since face less risk easier attract investors money lending institutions seek borrow funds expansion growth receive better interest rates due reputation stability these types companies offer......... Disadvantage :                • Double Taxation-Tendency double taxation corporate level followed appropriate dividend payments shareholder level reduce overall amount available reinvest growth future earnings ........                 • Rigid Management Structure-Strict rules procedures embedded within organizational hierarchy mean slower response changes market trends adapt swiftly competitors take advantage opportunities quickly

Sample Solution

  Sole Proprietorship: A sole proprietorship is the most basic form of business organization, owned and operated by one individual. It requires little paperwork or cost to start up though can be difficult to secure funding from outside sources due to lack of liability protection for the owner. The owner of a sole proprietorship has complete control and ownership over all profits, assets and liabilities.