Four Types of Business Ownership

Sole Proprietorship, Partnership, LLC, Corporation

Sole Proprietorship- the simplest a business can operate, not a legal entity, it just means a person who owns a business personally and is responsible for it.


  • the most simple to run
  • owned by only one person
  • income is taxed once
  • no hassle with partnership
  • is easy to dissolve


  • if the owner has hardships it can negatively affect the business
  • owner is 100% responsible for all choices made

Policies and Regulations

  • the owner is responsible for all debts and legal liabilities

  • the owner can have people work for them

  • the owner receives all profit

  • all the assets are owned by the owner

Examples: food services, manufacturing, real estate

  • Facts:
    1. it is a one person show
    2. the owner gets all of the income
    3. the owner does all of the decision making

    Partnership- takes place when two or more individuals make a written agreement to run a business


    • allowed for shared responsibilities

    • complementary skills

    • easy and inexpensive


    • shared profits

    • disagreement

    • joint and individual liability

    Policies and Regulations: all partners have to contribute to all aspects and be in agreement, everything has to be split up evenly.


    1. run by two or more people

    2. all partners are responsible

    3. they split the money evenly

    Limited Liability Company-characteristics of partnership and corporation


    • choice of tax regime

    • much less paper work

    • protection against investors


    • lots of tax

    • not as many investors

    • number of owners


    1. more flexible than a corporation

    2. charging order is higher

    3. double taxation

    examples: businesses like Starbucks and at&t

    Corporation- run by a guide of people called board of directors


    • limited liability

    • reduces share holder amount

    • assets and structure continue beyond life time


    • ownership is separated from management

    • substantial fees

    • taxed at a lower rate than income


    • consists of various departments

    • business divisions

    • lower tax rates

    Examples: most businesses are corporations like Nike, or dr. pepper

    Forms of Business Ownership