Discuss the advantages and disadvantages of the sole proprietorship, partnership, corporation.
For Part 1 and 2, it must be 150-250 per each part, and also use references that are based in the United States. 2 references each.
Part 1(a)
A sole proprietorship is a business that is managed and owned by one individual. There are many advantages including the simplicity of starting the company, the profit is yours to keep, and being able to make all the decisions for the company with little legal restrictions. You are your own boss in a sole proprietorship which allows for a lot of flexibility, but starting a company is still not going to be an easy task. One of the disadvantages of starting a sole proprietorship is the unlimited personal liability for the owner. This means that anything that all the debt is up to the owner to take care of. A partnership is similar to a sole proprietorship, but instead of one individual starting the business, there are two or more. It is easy and inexpensive with little government regulation, just like a sole proprietorship. In a partnership, however, you are able to share skill-sets and profits, as well as attract limited partners. A limited partner is a “financial investor in a partnership (that) cannot participate in day-to-day management…and ha[s] limited liability for the partnerships debt.” At least one partner must be a general partner, which has unlimited liability for debts. A partnership is also unlikely to make as much money as a corporation would, and there can be issues between the partners. A corporation is a “separate legal entity apart from its owners that receives the right to exist from the state in which it is incorporated. A corporation “allows investors to limit their liability to the total amount of their investment in the business.” Corporations essentially only require that you follow the rules and regulations, and you are unlikely to have any issues. An S corporation is “a corporation that retains the legal characteristics of a regular C corporation but has the advantage of being taxed as a partnership if it meets certain criteria.” Taxation as a partnership is a great advantage for S corporations.
Part 1(B)
For this assignment I have listed the advantages and disadvantages for several business entities. According to my list Sole Proprietorship and Limited Liabilities Companies have more advantages than the other entities. Partnership and S Corp. seems to be the less desirable for me.
ADVANTAGES
sole proprietorship – the simplest form of business organization, does not cost a lot, an owner can make all the management decisions (hiring &firing), owns all the business and all the profits, can sell the business at the owner’s requests.
partnership – a general partnership can be oral, written, or implied. A general partnership does not pay federal income taxes, it is easy to dissolve.
corporation – most dominant form of business in the U.S., approximately 85% of the US gross business receipts, you can be a corporation with one owner, veil corporation, shareholders are not personally liable.
S corporation – limited liability, owners are better protected.
limited liability company – it allows flow-through taxation, LLC does not have to file a form with the IRS to obtain flow-through taxation (Cheeseman, 2016), it can have any number of member-owners, can have nonresident alien members, can own 100% of other business, can manage the business and still have limited liabilities, provides limited liability to all members, limited record-keeping.
joint venture – you can share the risk, expenses with the other partner, increased resources, additional knowledge to the venture.
DISADVANTAGES
sole proprietorship – access to capital is limited, the owner is liable for all debts
partnership – a general partnership can manage a business but does not have limited liability. Each partner reports their own profits, must deal with third parties, if one partner decides he/she wants out it too easy to dissolve.
corporation – are liable for their debts & obligations, double taxation, and forming a corporation cost more, raising investment funds are harder.
S corporation – can have only 100 shareholders, cannot have shareholders other than estates, cannot have nonresident aliens as stockholders, S-Corp may not own more than 80% of another corporation.
limited liability company – you may pay self-employment taxes.
joint venture – you must discuss everything with the co-owner, not everyone has the same mindset, communication regarding goal, vision, and long term could change, leadership and management is not equally supported.
References
Cheeseman, H. (2016). Business Law Legal Environment, Online Commerce, Business Ethics, and International Issues Nineth Edition. Untied States: Pearson Educatoin.
Part 2(A)
What is an ethical climate in the workplace? “Ethical climates develop as a result of organizational policies, practices, and leadership, and exert significant influence on the ethical decision making of organizational members and their subsequent attitudes and behavior at work” (Newman, Round, Bhattacharya, & Roy, 2017). This is a more recent advent in companies that is championed by the workforce and consumers alike who strive to exert change within the places they work and patronize.
How are companies with ethical climates recognized? “The American Business Ethics Award (ABEA) recognizes U.S. companies who exemplify high standards of ethical behavior in their everyday business conduct and in response to specific crises or challenges. Each year, the ABEA is presented in three categories: large companies (with over 2,500 employees), mid-sized companies (with 250-2,500 employees), and small companies (with fewer than 250 employees). Financial service companies and nonprofit organizations are excluded from award consideration due to their close association with the Society” (Society of Financial Professionals, 2004). This is a great gauge of how a company is performing its ethical practices. I recently worked for a company that was voted 100 Best Places to Work (Small Business). The company took great pride in this distinction and was awarded this honor based on employee, customer, and community satisfaction.
A role model company explored for its ethical climate is Best Buy. Named “America’s most sustainable company in 2019 by Barron’s, CEO Hubert Joly is committed to reducing his company’s environmental impact by reducing waste” (Moore, 2021). Several different ways the company is achieving this is by having their Geek Squad drive only Toyota Prius hybrid cars, thus saving an estimated “140,000 gallons of gas” yearly. Best Buy is also instituted a remarkably successful electronic recycling program which has, in their estimates, saved more than “2 billion pounds of unwanted electronics and appliances” from the landfills. Finally, their “Teen Tech Centers teach disadvantaged young Americans basic technology skills, [helps] grow its labor force by creating trained employees, and reduces unemployment in America” (Moore, 2021).
References
Moore, Barry D. (15 Mar 2021). 10 Great Examples of Ethical Decision Making In Business. Great Work Life. https://www.greatworklife.com/ethical-decision-making-in-business-examples/. Accessed 6 July 2021.
Newman, A., Round, H., Bhattacharya, S., & Roy, A. (2017). Ethical Climates in Organizations: A Review and Research Agenda. Business Ethics Quarterly, Cambridge University Press. https://www.cambridge.org/core/journals/business-e… agenda/. Accessed 6 July 2021.
Society of Financial Service Professionals’ American Business Ethics Award. (2004). Society of Financial Service Professionals. http://sfsp.net/page.cfm?usr=chicago&pageid=858. Accessed 6 July 2021.
Part 2(B)
Businesses must display proper ethics to have a good reputation. Enhancing the organizations reputation will attract investors, new hires, and customers. Organizations that practice good ethics have a quicker turnaround rate for finding new hires while also maintaining a great retention rate. Good ethics within an organization create a welcoming environment for everyone. A proper ethical climate creates a thorough understanding throughout the organization established by the standards that were created internally through egoism, benevolence, and principle. “Organizations may have multiple ethical climates that exist” (Lawrence & Weber, 2017 P. 115) Ethical climate throughout the business world range by accounting, financial, marketing, information technology, and other functional areas which pertain to production and operations.
These different departments have their own code of ethics that they must follow to maintain an ethical environment. For accounting ethics, accountants must be honest, provide accurate data, and maintain integrity when conducting audits. They are required to follow the Code of Professional Conduct of the AICPA. Financial ethics consists of responsibly managing the assets and capital of the organization through the CFA Code of Ethics and Standards. Marketing department must maintain honesty and fairness about their products when it is advertised because of the AMA membership. Accessing personal information goes against the AITP Code of Ethics and Standard of Conduct for the information technology department.
IBM is currently ranked as the one of the topmost ethical companies in the business world. It has ranked in this category for three consecutive years. They are known for their business practices and the integrity they maintain. “Their main goal is to maintain trust and responsibility in all their relationships and shape how their employees make decisions and act”. (Louissaint, 2021, para. 3-4) Most importantly they value their employees, their policies, and their customers. The foundation that they established by staying consistent and train their employees has helped them create an effective ethics program.
References
Lawrence, A &Weber, J (2017). “Business and Society: Stakeholders, Ethics, Public Policy” (15th ed.). New York, NY: McGraw-Hill Education. ISBN: 978-1-259-31541-1
Louissaint, Obed. “IBM Rank on the Ethisphere’s 2021 World’s Most Ethical Companies”, February 26, 2021, ibm.com, web.
Part 3
Submit Business Plan Part A (Business Plan Assignment Sheet Section I: Introduction)
Part 3 has a attachment so just follow part A from the attachment it is called the Executive summary. A run down of the company is called Investment Group LLC. And what we do is buy, fix, and sell homes in the Tampa Bay Area.
