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Monica Porter loves photography and wants to start her own company
Monica Porter loves photography and wants to start her own company. She is single, 26 years old, and lives in an apartment in Nicetown. She has a job as a clerk in a grocery store that currently pays her living expenses. Her dream is to be a portrait photographer specializing in events such as Weddings, Birthdays, Graduations, etc. She has saved $10,000 to start this endeavor. She knows nothing about accounting and has hired you to provide her with accounting services as well as guidance in starting this business. This first task is to determine what business organization entity she should choose. Please explain the different business formats and which one you would suggest for her business which will be named "Portraits by Porter" (PBP).
Expert Solution
If an individual started a business on proprietorship basis, ownership of the Assets and liability will be owned by the individual all the risk and reward owned by the individual whatever profit on owned by the individual.
When an individual switch to the limited liability partnership, in that case, the owner of the company will be on by the shareholder whatever profit on by the company some of the portions will be distributed to the shareholder as a dividend.
After analyzing both the cases Monica should go with the proprietorship business because there is some advantage over the limited liability partnership. Its an initial stage of the organization that some Monika should proceed with the proprietorship business.
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