4 Types of Business Ownership

Information & More

Sole proprietorship

Explaination

Sole Proprietorship is a type of business entity that is owned and run by one natural person and in which there is no legal distinction between the owner and the business.

Advantages

-You have less paperwork

-Easy to set up

Disadvantages

-Personally liable for all debts and actions of the company

-Your business doesn't exist as a separate legal entity.

Rules

-Do not permit employees

- The personal assets of the sole proprietor and the business assets are one and the same for liability purposes

-Protection is important because claims against the business could result in seizing of a home or other assets.

Facts

- The vast majority of small businesses begin their existence as sole proprietorships

-Can engage in any form of legal business activity any time and anywhere

Examples

-Landscapers

-Housekeeping

-Tutors

What is a Sole Proprietorship?

Partnership

Definition

Two or more people joined together in a partnership

Advantages

-Your business is easy to establish and start-up costs are low

-More capital is available for the business.

-Two heads is better than one

Disadvantages

-Liability of the partners for the debts of the business is unlimited

-Each partner is liable for their share of the Partnership debts as well as being liable for all the debts

Rules

-Product

-Brand

-Distribution

Facts

-Every partner has equal rights.

-An Active Partner participates in the day-to-day operations of the business.

Examples

-Warner Bros

- HP

-Intel

-Mcdonalds

Business Partnership

Limited Liability Partnership

(LLP)

Definition

A business organization that allows limited partners to enjoy limited personal liability while general partners have unlimited personal liability

Advantages

-Liability Protection

-Tax Advantages

-Flexibility

Disadvantages

-Taxing authorities in some states recognize the structure as a nonpartnership for tax purposes

-Limited liability partnerships are not recognized as legal business structures in every state

Rules

A state filing and a registered agent is required

Facts

-All partners have Limited liability protection

-Allows flexibility between partners

Examples

-Taxes

-Assets

Limited liability partnership

Corporation

Definition

Acompany or group of people authorized to act as a single entity.

Advantages

-Shareholders are not liable for any debts incurred or judgments handed down against the Corporations.

-Corporations may be able raise additional funds by selling shares in the corporation.

Disadvantages

  • Forming a corporation requires more time and money than forming other business structures.
  • Governmental agencies monitor corporations, which may result in added paperwork.

Rules

-Right to inspect and get copies of register

-Register relating to trustees for debenture holders

Facts

-Corporations dominate the U.S economy

-Dominate the global economy

Examples

-Coca-Cola

-M&M's

-Google

THE CORPORATION [1/23] What is a Corporation?