Major Types of Business Ownership
By: Morgan Seyler
Sole Proprietorship
Definition
Advantages
Owners may freely mix business or personal assets.
Sole proprietorships carry little, if any, ongoing formalities.
Owners can establish a sole proprietorship instantly, easily and inexpensively.
May use a trade name or business name other than his, her or its legal name.
Disadvantages
A sole proprietorship remains personally liable for all the business's debts.
If a sole proprietor business runs into financial trouble, creditors can bring lawsuits against the business owner
Owners cannot raise capital by selling an interest in the business.
Sole proprietorships rarely survive the death or incapacity of their owners and so do not retain value.
Policies or regulations to follow
Obtain a Federal Employer Identification Number.
Register your fictitious business with your county or state.
Obtain a local tax registration certificate.
Obtain a permit to sell retail goods and collect state sales tax.
Facts
In 2008, the average annual net income of a sole proprietorship was only $12,000
Total 2008 net income of the 22.5 million sole proprietorships amounted to 265 billion dollars.
Examples
Catering Company
Housecleaning Service
Tutoring
Partnership
Definition
A single business where two or more people share ownership.
Advantages
Partnership Incentives for Employees
Complementary Skills
Shared Financial Commitment
Easy and Inexpensive
Disadvantages
Disagreements among Partners
Joint and Individual Liability
Shared Profits
Policies or regulations to follow
Tax qualification
Issue date
State of residence
Facts
There are 3 different types of partnerships, General, Limited, and Joint.
You don’t have to file any paperwork to establish a partnership.
Examples
Real Estate
Creative
Legal
Limited Liability Partnership
Definition
The partnerships that limit personal liability for business debts.
Advantages
- Liability protection
- Tax advantages
- Flexibility
Disadvantages
Special Tax Considerations
Partners Not Consulting
Death of a Partner
Policies or regulations to follow
- LLPs must register by filing a written statement with the Secretary of State or similar office.
- The name of every partnership filing must end with the words registered limited liability partnership.
- Limited Liability Partners must be individuals licensed in the profession performed by the LLP.
Facts
- Limited Liability Partners are not personally liable for the debts, obligations and liabilities of the partnership.
- Just like shareholders in a corporation or interest holders in an LLC
Examples
Professional Organizations
Taxes and Assets
Corporation
Definition
Advantages
- Protected assets
- Pass through taxation
- Tax favorable characterization of income
- Heightened credibility
Disadvantages
- Formation and ongoing expenses
- Tax qualification obligations
- Stock ownership restrictions
- Less flexibility in allocating income and loss
Policies or regulations to follow
- Employer Identification Number
- Tax Obligations for Businesses
- Business Licenses and Permits
- Labor Laws
Facts
- Giant corporations have become so dominant that it has become hard for small businesses to compete and survive in the United States.
- Big corporations completely dominate the media. Most all of the news that you see and almost all of the t.v. that you watch is fed to you by giant corporations.
Examples
- McDonalds
- Toyota
- Wal-Mart
Sites
- http://www.sba.gov/content/partnership
- https://www.wallstreetinstructors.com/ce/continuing_education/ltc8/id26.htm
- http://www.nolo.com/legal-encyclopedia/start-up-bureaucratic-requirements-sole-proprietorships.html
- http://www.entrepreneur.com/encyclopedia/sole-proprietorship
- http://yourbusiness.azcentral.com/statistics-sole-proprietorship-5293.html
- http://smallbusiness.chron.com/typical-examples-general-partnership-62195.html
- http://articles.bplans.com/business-s-corporation-facts-and-options/
- http://accountingexplained.com/misc/forms-of-business/corporation
http://www.taxpayer.net/media-center/article/4-examples-of-corporate-welfare-in-action