Are Form 8865 Ownership 2024

Welcome to Chapter five forms of business ownership. There are three major forms of businesses. First, there are sole proprietorships, which most businesses that are started are. Sole proprietorships mean that they are owned and operated by one person. Additionally, there are partnerships, which are owned and operated by two or more people. Finally, there are corporations, which are legal entities that exist independently of the owners. This means that if, for example, the owners passed away, the corporation would still continue to exist. A well-known example of this is Ford Motor Corporation, which continued to exist after Henry Ford's passing. Looking at the pie charts, it is evident that most businesses are sole proprietorships. However, when considering who makes the majority of sales and profits, corporations overwhelmingly dominate. Sole proprietorships are popular due to several advantages. They are easy and inexpensive to form and dissolve. For only $50, an individual can obtain a business license and become a new business owner. Furthermore, if one decides to shut down their sole proprietorship, they can simply do so. In addition, the profits all go directly to the owner. Sole proprietorships provide direct control and a significant amount of freedom from government regulations when compared to corporations. Lastly, sole proprietorships do not have the same tax evasions as corporations typically do. On the other hand, sole proprietorships also have several disadvantages. Firstly, it is challenging to raise capital as banks are often hesitant to lend large sums of money to sole proprietorships. Additionally, there is the issue of unlimited liability and potential loss. Many small business owners who are sole proprietors obtain million-dollar insurance policies due to the possibility of being sued by customers who could potentially claim all their assets. Another downside is the limited expertise in various areas. For instance,...