Assignment 1. Apex Training Company - Coursework Example

Thirdly, formation of a sole-proprietorship firm helped Martha to save taxes related to business and professional revenues. Fourthly, setting up a sole-proprietorship business helped Martha gain on profits and revenue solely. She was not obliged here to share the revenues and profits earned with other business partners (Madura 160). Concerns about Sole-proprietorship Sole-proprietorship business, although it does have the above advantages, also has certain grave shortcomings, for which Martha’s accountant related his concerns.

The salient disadvantages or shortcomings emanating from sole-proprietorship business can be underlined as follows. Firstly, it would be difficult for Martha, operating as a sole proprietor, to obtain loans from banks and financial institutions. Thus continual stress is imposed on personal finances of the sole proprietor. Moreover, the accountant was further concerned wit that the corporate investors tend to abstain from investing in sole-proprietorship firms owing to a greater fear of loss than in a partnership or other limited liability ventures.

Thirdly, the clause of taking decisions in an autonomous fashion by the sole proprietor, though acting as an encouraging factor, can happen to create separate risks owing to possibility of different emergencies. Fourthly, the accountant was also concerned that running a sole-proprietorship firm, though encouraging, invites a large number of uncertainties owing to the possibility of an accident happening to the sole proprietor. At that time it would become difficult to carry on the business operations of the firm in an effective fashion (Williams and Murray 45).

Advantages and Disadvantages of Partnership and LLC form of Business Formation of partnership form of business would relate the following advantages for Martha. Firstly, partnerships, being based on the mutual understanding of two or more people, are easy to form and are also supported by state legislation. Secondly, unlike sole-proprietorship, the partnership form of business has the applicability for gaining loans from financial corporations. Thirdly, the business being formed with the help of two or more people would help Martha in gaining due help pertaining to business and operational expertise.

Fourthly, the operation of the firm based on the decision of two or more members would help the business operate flexibly in changing external conditions. Fifthly, partnership form of business is exempted from income tax. The only tax levied is on the personal income of the partnership members. However, the partnership form of business also suffers from certain pitfalls like it makes the individual members liable for the total debt and malpractices irrespective of the conduct. Secondly, loss of mutual consent leads to conflicts among the members.

Thirdly, profit sharing in partnership is a difficult affair owing to difference in time and capital rendered. Finally, calculation of a share of a member during his or her exit is a tedious affair in partnership business (Gitman and McDaniel 103-104). Again formation of a Limited Liability Company or LLC would help Martha in defining the limit of liability of the different members in the firm thus reducing the threat of bearing total losses. Secondly, a LLC company has the potential to perpetually exist unlike a partnership or