Business Ownerships

By: Ian Erdman

Sole Proprietorship

This is a business run by one person and not registered as a corporation, partnership, or as a Limited Liability Company (LLC). Some regulations include possible business license in that area to start the business. Must report loss or income for business on your own personal tax return.

Pros: Doesn't have to be registered with the state.

Easiest way to start a company.

No special forms to start a sole proprietorship business.

Freedom

Tax benefits

Low cost to start


Cons: You alone can be held accountable for any business obligations.

Personal assets are at risk along with the company.

Difficult to get money/loans

If the business does fail you and you alone still owe all of the money.

Example: Cargill food processing company.

Partnership Business

This is a business where two or more people share ownership.Each partner contributes to all aspects of the business, including money, property, labor or skill. In return, each partner shares in the profits and losses of the business. Regulations include having to register with the business with the state. You’ll also need to establish your business name. For partnerships, your legal name is the name given in your partnership agreement or the last names of the partners.

Pros: Easy and Inexpensive.

Shared Financial Commitment.

Cons: Joint and Individual Liability.

Disagreements Among Partners.

Shared Profits.

Examples: Apple, Twitter, and Ebay.

Limited Liability Partnership (LLP)

Limited partnerships allow partners to have limited liability as well as limited input with management decisions.These limits depend on the extent of each partner’s investment percentage.

Pros: Liability protection.

Tax advantages.

Flexibility.

Cons: Not recognized as a legal business in some states.

Partners are not allowed to consult with other participants in certain business artners are not allowed to consult with other participants in certain agreements.

Example: Montgomery Coscia Greilich LLP

Corporation

This is a business that is an independent legal entity owned by shareholders.This means that the corporation itself, not the shareholders that own it, is held legally liable for the actions and debts the business incurs.

Pros: Limited Liability.

Ability to Generate Capital.

Corporate Tax Treatment.

Cons: Can be taxed twice.

Time consuming and money heavy.

Lots of paperwork.

Examples: Dr.Pepper, Nike, Starbucks