Types of Businesses

Proprietorships, Partnerships, and Corporations

Proprietorships

A Sole Proprietorship is a business owned and operated by a single person.


Advantages:


  • full pride in owning the business
  • receives all the profits



Disadvantages:


  • unlimited liability- responsibility for all debts and damages



Sole proprietors have to find Financial Capital, which is the money it takes to run a business



A Partnership is a business that two or more people own and run.


Structure:


  • Articles of Partnership is a document which identifies how much money each person will contribute and what role they will play in running the business.



Advantages:


  • Pride in sharing ownership of a business
  • More ways to raise money
  • Special talents from each individual
  • More efficient operations


Disadvantages:


  • More complex- new agreement has to be made if someone drops out
  • Owners have unlimited liability- each owner is fully responsible for the debts they produce



A Corporation is an organized business recognized by law that has many of the rights and responsibilities of an individual.


Structure:


  • Charter- a government doc granting permission to organize
  • Stock- ownership shares of the corporation
  • Stockholders- part owners of the corporation. They use money received rom selling the stock to set up and run the business



Advantages:


  • Ease of raising financial capital
  • Can grow to be large businesses



Disadvantages:


  • Expensive and complex
  • Very little say in business decisions
  • More regulation by the government