Strong_Reflection 3_ACCCB

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1 Reflection Three Amanda Strong University of Phoenix ACCCB/543 Comfort Chevannes February 10, 2024

2 Reflection Three Types of Business Forms Choosing the form of business to create is one of the most important decisions an enterprise makes. The extent of liability and control the owner will have depends on the form of the business. Differentiate among the major forms of business organization and describe what you consider to be the top 2 advantages and disadvantages of each form. Address the regulatory and financial statement differences of each form of business. There are different major forms of business organizations. Sole Proprietorship is when you go into business on your own. In a business where you are the sole proprietor you are in sole control of the management and profits of your organization. Creating a sole proprietorship offers you the least amount of financial and legal protection. Unlike the other business forms a sole proprietorship does not create a separate legal identity for the business. The owner of the business shares the identity with the company. The owner is fully liable for all liabilities the company can encounter. However, with sole proprietorship you do not have to answer a board or any other person and retain full control. Sole proprietors can have tax benefits because the income is considered the owner’s personal income and only taxed once. Sole proprietors must deal with few regulation requirements. Partnerships are defined as a business owned by two or more people referred to as partners. Partnerships have advantages of flow-through taxation, which means the income is the owner’s income and like the sole proprietorship is only taxed once. There are two types of partnerships. General partnership means each partner is participating in the business operations and every partner is liable. With this partnership each partner is responsible for the other partner’s actions. Limited partnership is created when there is

3 at least one general partner. As the general partner you take unlimited liability while managing the operations of the business. If you are not a general partner, you are a limited partner that means you take on limited liability and are not involved in the management with no direct control. Limited liability company (LLC) is the flexible type of business. They are a combination of a partnership and a corporation. They also have the tax benefits of the sole proprietorship and the limited liability of a corporation. When you form a limited liability company you can choose between different tax treatments. By creating the limited liability company, it creates in own legal entity and protects the owners from being personally liable for any of the operations and debts of the business. Lastly, the corporation creates a separate legal entity by shareholders. When you choose to corporate a business it protects the owners from personal liability for debts and legal disputes with the company. It can be a little more complicated to create a corporation compared to the other three types of companies. Documents are created which include information like name, location, and purpose. With a corporation if the owners pass away or declares bankruptcy it will not affect the company because the corporation is a separate entity. There are three types of corporations C corporation, S corporation, and non-profit corporation.

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4 Federal Trade Commission Consumer laws were established to protect purchasers of goods and services. What purpose does the Federal Trade Commission serve and why must business owners be educated on Federal Trade Commission practices? Consider one of the following sections of the Federal Trade Commission Act:  Deceptive Advertising  Labeling and Packaging Laws  Sales Regarding the section you chose, provide an example of when a deceptive practice has been used in business and the consequence(s) for the deceptive practice. The purpose of the federal trade commission is to enforce the federal consumer protection laws that prevent fraud, deception, and unfair business practices. They also enforce federal antitrust laws. Business owners should be educated on federal trade commission practices because as the owner you are liable to follow the laws that are enforced by the federal trade commission. You want to be compliant with all laws and regulations to prevent fines or penalties. Looking at the Federal Trade Commission Act and the labeling and packaging regulations it states all consumer commodities be labeled to show contents, identify commodity, and show the name and place of business of the product’s manufacturer, packer, or distributor. An example of deceptive practices regarding labeling and packaging is regarding toilet paper. How deceptive and does anyone really understand the labels that say this number of mega rolls equal this number of regular rolls. Which regular roles are they comparing this too? Are the sheets the same size or is there a difference in the surface area? This can be perceived as deceptive because you do not know the exact facts so they could be inaccurate.

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