Type of Businesses
Prop. / Part. / Corp.
Different Businesses
There are three different types of businesses today in the US. The three types are solar proprietorship, partnership, and corporation. Each of these offer different advantages and disadvantages to people.
Proprietorship
- sole proprietorship is where one person makes up all the rules and does everything themselves
Partnership
- a business that two or more people own and operate; when start the business you and your partner must draw up a legal agreement (articles of partnership) to determine how much money each of you will contribute and what role you each play in the company; the document also describes how to add or remove partners or how to break up the business
Corporation
- to start a corporation you have to have a charter (granting permission to organize, includes name, purpose, address, & other features); know the amount of stock for stockholders; corporations uses the money received from selling the stock to set up and run the business
Lauren Hyde
Advantages:
Proprietorship:
- the sole proprietor has full pride in owning the business and receives all the profits; they can make decisions quickly without consulting anyone; pay no income tax
Partnership:
- pride of sharing ownership in a business; partnerships usually raise more money; they can always take in more partners to provide funds needed; pay no income tax; larger in size
Corporations:
- expensive & complex to set up; business owners have very little so say in the management of the business; difficult to unite stockholders to force the managers to act in a particular way; subject to more regulation by government then other businesses
Disadvantages:
Proprietorship:
- unlimited liability, or complete responsibility for all debts and damages arising from doing business; to pay the debt the person’s assists are to be sold
Partnership:
- the legal structure is complex (when a partner is removed a new agreement is made); owners have unlimited liability; fully responsible for all debts of the partnership
Corporations:
- expensive & complex to set up; business owners have very little so say in the management of the business; difficult to unite stockholders to force the managers to act in a particular way; subject to more regulation by government then other businesses