Business Ownerships

Nicholas Ramirez

Sole Proprietorship

This is what is used most as it is the easiest to start off with. It is owned and ran by one person only, and that person is responsible for all choices.

Advantaged include being able to run the business exactly how you want. You make every choice and do not need to negotiate or compromise. It is easy and inexpensive to form and taxes are easily paid.

Some disadvantages that you have nobody else to help you and nobody else to rely on. You are on your own and all of the weight is on your shoulders. You are also liable for everything that happens.

Facts

  • You run the business by yourself
  • You still need all licenses and permits to run your business
  • It is very burdening

An example of a sole proprietorship would be a man just out of college forming his own clothing business.

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Partnership

There are two types of partnerships. In a general partnership every partner is responsible for the business and they all manage the business. Limited partnerships have both general and limited partners. The general partners manage and are liable for the partnership. Limited partners are only investors and have no control over the business. They have less responsibility than general partners.

An advantage of a partnership is its tax treatment.

A disadvantage is that you are still liable for obligations and debts. A partner can make a choice that impacts every other partner. Partnerships are also more expensive to form.

There is a partnership agreement that every partner must follow.

Facts


  • In case of a major disagreement you can establish votes.
  • Partners do not all have to own equal percentages of the business.
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Limited Liability Partnership

Similar to a partnership. The general partners have full control of the company but are liable. Limited partners have no liability beyond their own investment.
Business Entities - Limited Liability Company

Corporation

A corporation is owned by shareholders. The corporation itself is liable for its actions and debts. They are more complex than other business types due to fees and requirements.

Advantages

  • Limited liability
  • Corporate tax treatment
  • Ability to generate capital

Disadvantages

  • Time and money
  • Double taxing
  • Additional paperwork

Facts

  • Corporations pay income taxes on profits
  • Corporations must pay federal, state and sometimes even local taxes

Microsoft is a corporation.

Citations

"Sole Proprietorship | The U.S. Small Business Administration | SBA.gov." Sole Proprietorship | The U.S. Small Business Administration | SBA.gov. N.p., n.d. Web. 19 Sept. 2014.

"Partnership-business - The Pros & Cons." The Pros Cons. N.p., n.d. Web. 19 Sept. 2014.

"Partnership Definition | Small Business Encyclopedia." Entrepreneur. N.p., n.d. Web. 19 Sept. 2014.

"Partnership | The U.S. Small Business Administration | SBA.gov."Partnership | The U.S. Small Business Administration | SBA.gov. N.p., n.d. Web. 19 Sept. 2014.

"Sole Proprietors." Birmingham Business Law Blog. N.p., n.d. Web. 19 Sept. 2014.