ABSTRACT
The legal form of an organization is the formal structure, be it a sole proprietorship, partnership, or a corporation. A sole proprietorship is the simplest form of a business organization. In a sole proprietorship, the owner of the business and the business are one and the same—that is, the business owner cannot be separated from the business. Corporations are, in a legal sense, a “person.” As a “person,” corporations are able to buy and sell assets, enter into contracts, and otherwise act as a person would. Corporations also enjoy limited liability in that only the assets of a corporation can be used to satisfy loans and judgments. Corporations are generally formed as what are called “C” corporations. “C” corporations can have an unlimited number of shareholders and unlimited revenue. The downside of this arrangement is that the profits are taxed to the corporation, and then dividends are taxable to the shareholders. This is what is known as “double taxation.”
