Types of Businesses

By. Marquez Rosebure

Sole Proprietorship

A business owned and operated by one person
A Sole Proprietorship usually consists of Beauty Salons, Pizza Restaurants, or Cleaners

Advantages

Can make decisions without having to consult with a boss or co-worker.


You don't have to pay corporate income tax.


You have that pride of owning your own business.

Disadvantages

You Have unlimited liabilities which mean you are responsible for everything that happens in your business. Also debts and taxes


It's hard for Proprietors to raise financial capitol to make their business grow.

The most Common type of business.

Partnerships

A Partnership is a business owned by two or more people.

Article of Partnership

Article of Partnership is a formal document drawn up by partners indicating significant and important aspects of the partnership.
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There are two types of Partnerships:

A general partnership must have two or more persons engaged in a business for profit. The business is not a separately taxed entity; rather, it is a conduit where the profit or loss flows through to the partners. The partners report their share of the partnership profit or loss on their individual income tax returns. All partners enter into partnership by either oral or written agreement that must cover all terms of the parties’ business relationship.


A limited partnership is formed by two or more people, with at least one person acting as the general partner who has management authority and personal liability, and at least one person in the role of limited partner who is a passive investor with no management authority. All partners – both general and limited – must enter into limited partnership by either oral or written agreement.

Advantages

Because it's a partnership, you save more money than a proprietorship.


You pay no corporate income tax.


Running your business is a lot easier than a proprietorship.


You have a greater borrowing capacity.


The liability of the partners for the debts of the business is unlimited.


Each partner is jointly liable for the partnership's debts. Each partner is liable for their share of the partnership debts as well as all other debts.


There is more risk in disagreements and complications in making decisions.

Corporation

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

Structure

Corporations start out with a Charter: a gov. document granting permission to organize. It includes the name, purpose, address, and other features of the business.


It also specifies the amount of stocks that the corporation will have.


People who buy stocks from the company become stockholders of the company, which means that they become part ownerships in the corporation.

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Advantages

Status


Liability is limited.


You have the ability to raise investment money.


Employees has benefits


Tax advantages


One of the most preferred types of businesses

Disadvantages

Expensive to set up


More heavily taxed in income


Pays taxes in profits


They are subject to more regulation by the gov. than the other forms of business.


They must release certain reports on a regular basis which gives out things like financial information about the company.