3 Business Types

Proprietorship, Partnership, and Corporation



  • unincorporated business owned and run by one individual (no partners are involved), with no distinction between the business and its owner.

  • complete control and decision-making power over the business.
  • Sale or transfer can take place at the discretion of the sole proprietor.
  • No corporate tax payments

  • Proprietor of the business can be held personally liable for the debts and obligations of the business.
  • Additionally, this risk extends to any liabilities incurred as a result of acts committed by employees of the company.
  • All responsibilities and business decisions fall on the shoulders of the sole proprietor.



  • When you start you and your partner draw up a legal agreement called articles of partnership

    Clarifies how you will share profits or losses

  • This determines how much money each of you will contribute and what role each partner will play Clarifies how you will share profits or losses


  • The pride and sharing ownership some

    Can usually use more money because theres multiple owners

  • Partners don’t pay corporate taxes


  • The legal structure is complex



  • Someone who wants to star a corporation must get a charter.The charter specifies the amount of stock or ownership shares of the corporation that will be issued
  • The stockholders elect a board of directors to act on their behalf
  • The board hires management

  • The ease of raising finical capital
  • If it needs money the corporation can sell more stocks
  • Easier to borrow large amounts of money
  • Ease of raising capital allows the corporation to grow to be huge

  • They often are expensive and complex to set up
  • The business owners have very little say in the management of the business
  • .Millions of people own the shares of major corporations, but it is difficult for them to unite to force the managers to act in a particular way.
  • Corporations are subject to more regulation by government than the other forms of business