Why Form 8865 Ownership 2023-2024

This first video is on section 6.1, which has the following objectives: we're going to describe the advantages and disadvantages of the three major forms of business organizations, and we're going to describe how cooperatives and nonprofits are like and unlike corporations and franchises. So, organizing a business, the three main types of businesses that you can organize are sole proprietorships, partnerships, and corporations. So, an entrepreneur, when they are deciding after they've decided their product or service and the writing up their business plan, they have to decide which type of business is going to best fit their situation. Sole proprietorships are probably the most important – not the very most important, but the most popular way of setting up a business. About three-fourths or 75% of all businesses in the United States are sole proprietorships. So, our sole proprietorship is a business owned by one person – so sole, one, that's all it is. The advantages to a sole proprietorship are that it's easy to start, you make all the decisions, you run the company as you see fit, you keep all the profits. Income taxes are lower because corporate income tax is usually a higher tax bracket than personal income tax, but also because a corporation is sometimes considered double taxed. Corporations will pay taxes on their income, and then when they issue dividends to their stockholders, those stockholders are paying taxes on the income from the dividends – so double taxation. Sole proprietorships do not have that. However, there are some disadvantages – there's unlimited liability, which means that the owner is responsible for all debts, and if they have no more money, they basically have to bankrupt themselves in order to pay off the debts. Limited access to credit because banks are usually pretty wary of...