Types of Business Ownership

By Leon Jacob

Sole Proprietorship

Definition: A sole proprietorship is a business created and owned by one person. This person manages the entire business. Lean more about Sole Proprietorship


Advantages:


  • The sole owner receives the entirety of the business's profits.
  • This type of business is easy to set up, and does not cost much to operate.
Disadvantages:



  • The owner is personally responsible for all the risks the business entails.
  • "Most of these businesses close down if the owner dies or runs out of capital" (Hodgetts 1).

Policies and Regulations: An entrepreneur who wishes to set up a sole proprietorship is usually not bounded by legal restrictions.



Facts: A sole proprietorship is the type of business we think of when we hear the term "small business". These are very common in many industries that do not require too many employees, such as farming (Hodgetts 1).


Examples: My dad actually owns and operates a small business, myQBook. It is an online math enrichment program for elementary and middle school kids. This business started off as a sole proprietorship.

Partnerships

Limited Liability Company (LLC)

An LLC is basically a cross between a corporation and a partnership. There are many advantages to this type of business ownership. See Advantages and Disadvantages of an LLC. I was surprised to lean that Chrysler and Toys R Us are both Limited Liability Companies.
Corporations: "What is a Corporation?"

I found it interesting that applying for your business to be "S Corporation" can reduce the problem of double taxation. Also, there are two main types of corporations: Small and Giant. The vast majority of U.S. corporations are small corporations.

Works Cited

Glencoe. Business Plan Project Workbook. New York, NY: McGraw Hill, n.d. Print.


Hodgetts, Richard M. "Business." World Book Student. World Book, 2014. Web. 17 Sept. 2014.


"Limited Liability Company". The U.S. Small Business Administration. n.p, n.d. Web. 19 September 2014.


Reference180.com. "What is a Corporation?" . YouTube. Reference180, 22 April, 2013. Web. 17 September 2014.