Question

1. business model design and different forms of business entity (i.e. "C" Corp, "S" Corp. LLC, Partnership).

2. Demonstrate how to form a corporation in California.

Answer 1

Answer 1;- Different forms of business entities are as below:-

A sole proprietorship can be seen as an unincorporated business which is owned and operated by a single person and it does not involve any other person or entity and thus there is almost no discrimination between the owner and the business. The sole proprietor will be having the ownership of all the profit and will be responsible for different losses and liabilities.

Partnerships are a good form of business to start up for some entrepreneurs, and not so great for others. If an entrepreneur wants more control and wants to seek out a higher profit level, than a partnership may be a great way to go. The most important facet of starting the partnership is making sure that the partners get together and create a partnership agreement that covers as many potential problems as possible. Without an extensive partnership agreement, the partnership itself may go haywire down the line when problems small or large arise. Going into the introductory stages of the company, “each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business” these elements are what makes up the partnership and also are the elements that later bring the partners into the court of law

A limited partnership is the business venture where all the partners are involved in the business management and activities but all have limited liabilities.

LLC can be seen as a hybrid form of business organization which presents the limited liability feature to the business firms and it also provides several types of tax benefits of partnership. One can create the LLC having an only single member as it is the case with Sole Proprietorship. LLCs can include the real individuals, other LLCs, corporations or partnership firms as their members. In comparison to the limited partnership, there can be an active participant of LLC in the normal day-to-day operations of the firm. If we compare it with S corporations, LLC can include both the corporations or the partnerships and can have any number of members and it is not necessary to have domestic members. Initiating LLC is quite simple than initiating any other corporation. One has to only provide the name of LLC along with the contact information for the LLC’s legal agent. Most of the states allow the formation of LLC by the competent business person without requiring any kind of legal assistance and requiring lesser time and capital. It is not necessary in case of LLC to issue stock certificates, maintain annual filings, elect a board of directors, hold shareholder meetings, appoint officers, or engage in any regular maintenance of the entity. In other to have its name changed, LLC can also file d.b.a. filings.

Corporation:-As per law, a corporation can be defined as an entity which is completely distinguished from its owners and has its own legal rights. The corporation has the right to sue, can be sued, can buy and sell the property, and sell the rights of ownership in the form of stocks. Mainly corporations can be divided into three categories which are C corporation, S corporation, and B Corporations. There are many tax advantages with S and B corporations in comparison to B corporation but some certain eligibility criteria must be satisfied.

Non Profit Organization:- The main focus of these ventures is to help the government in uplifting the different sectors and segments of society. They do not work on a profit model, their main focus remains on charitable activities.

Cooperative:- These are the businesses which are owned and managed by the members of the group for the benefits of the members only.

Answer 2:-

In order to form a corporation in California, the following steps are required:-

• Select a corporation name
• Formation and submission of Article of Incorporation with the California Secretary of State with a fee of $100
• Appointment of a Registered Agent which is mandatory
• Create a corporate record book
• Establish corporate bylaws which are mainly the internal documents which define the basic laws and principle of the business in the corporation
• Appointment of initial corporate Directors
• Conduct the first meeting of the Board of Directors
• Issue the stock for the corporation