Today we are going to discuss the different types of businesses and the advantages and disadvantages of each type of business. A sole proprietorship business is a business that is usually owned and ran by one individual person. A sole proprietorship business has many advantages. The reason why a lot of people choose a sole proprietorship business is because they are their own boss. This type of business is the easiest business to start making it the most simple business to run. There are no legal documentation needed to start a sole proprietorship business. Since there is no need for legal documentation there is no need for legal fees. The owner retains all the earnings of the business. If the business is successful the owner can take …show more content…
General partners assume full or shared responsibility for running the business activities. Limited partners invests money in the business but doesn’t take any responsibility in managing the business or dealing with the activities of the business. Partnerships do have legal requirments but they are limited to register the name of the business and obtaining any license or permit that they may need. Lenders are more willing to loan partnerships a lot more than a sole propiertorship business. The disadvantages of a partnership is they also have unlimited liability allowing them also to become sewed by creditors. Partnerships also can have partner disagreements which can cause a business to get off the goal that they are trying to achieve. In some cases disagreements can not be resolved and partnerships have to split up. If the partners of the business split up or one of the partners want out the assets of the business become frozen until the partnering wanting out gets their share of the business.
The next type of business that I am going to explain is corporation businesses. A corporation business was declared in 1819 to be qualified as a artificial person. A corporation has the right to start and operate business, the right to borrow money, and the right to be sued or sue. The owners of a corporation are the companies stockholders. The owners own share or stock that gives them part ownership of the corporation. The company has either open or closed stock. Open
| A general partnership is comprised of a group of two or more individuals who enter into an agreement to start a business. The partners and the business are legally the same. The partners enter into an agreement called the articles of partnership and are typically equally active in the business and the business’s management, unless otherwise stated in the partnership agreement. All profits and losses are shared by the partners in a joint business venture.
The individual owner is limited to personal money and loans when it comes to funding the business.
In a general partnership there is also the issue of control. Whereas in a sole proprietorship the sole owner has full control in the business, in a general partnership the control is split equally between the partners. This can lead to issues when the partners do not agree on the direction they want to take the company in regards to growth or other
partnership to continue, in the event a partner withdraws from the group. Similar to sole proprietorship, general partnerships tend to have a difficult time rounding up funding and resources, since most of the necessary capital comes from each partner's personal assets. This in turn may hinder longevity and growth of the organization. 4. Control In a typical general partnership, all partners will have equal rights and control over the business. It allows any partner to act on behalf of the business to make decisions and negotiation with
Convenience/Burden- Like a general partnership a limited partnership is easily formed and can enjoy pass through-taxation. It can also be easier to get financing with a limited partnership. A downfall of the limited partnership is that the death of a general partner can dissolve the partnership unless a prior agreement has been established.
A limited liability company protects each partner from personal liability for certain obligations of the company. An important difference from other partnerships is that each partner is liable for the debts and obligations of the partners. With limited liability Company, each state has its own laws governing partners for these vessels. Some states allow only certain professions, such as lawyers and accountants to form LLP. Some states only provide protection from liability for negligence claims, leaving personally responsible for other types of requests partner. For tax purposes, profits are divided equally between the partners and the partnership is not taxed separately.
This protects the limited partners from the full liability that is shared by the general partners. Income Taxes – The limited partner’s profits are considered personal income and taxed as such. All profits from the limited partnership are considered personal income and taxed at their personal tax rates. Longevity / Continuity – The continuity of the business is not affected by the death or disassociation of a limited partner. An advantage for a limited partner is that the limited partner’s investment takes priority in the general partnership dissolves due to a death or disassociation of one of the general partners.
Convenience/Burden: Limited Partnerships have extra requirements placed upon them to comply with state regulatory requirements. They must maintain a registered agent to represent them in the state in which they were formed. They are also required to file an informational report with the IRS of the profits passed to the general partners.
business. Sole proprietorship is one of the easiest types of business to create. You as the owner
LIABILITY – The general partner has unlimited liability, while the limited partner is typically liable for the investment that he contributes.
A partnership is a business that has 2 or more people working in it like Starbucks is a business that is in a partnership. The advantages are you have more capita available to you and the company you have combined skills with other workers simple to set up you have tax advantages the disadvantages are unlimited liability you have to share your profit with the other owners you can have conflicts with owners or workers that do not agree partnership ends to death and possible
After the creation of a business plan, the next step to operating a business is the selection of an appropriate business structure. Different legal forms of business ownerships affect different managerial and financial factors from the business names to the tax obligations (Gregory, n.d.). The most common forms are sole proprietorship, partnership, cooperatives, and corporations. There are different types of corporations in the business world, but the two most general corporation types are S Corporation and Limited Liability Company (LLC) (Ferrell et al., 2013). The sole proprietorship is the easiest and most basic form of business ownership. It is owned and run by one individual, which is the proprietor. The individual is entitled to all profits and is responsible for all the business’s
Is the most common business type, where the business is operated and owned by a single individual. In this type of business, the sole proprietor provides capital, does not share profit or loss and runs the business alone. As such, the business and the owner are indistinguishable for tax and legal purposes (Dlabay, 2011). To differentiate this business from other business types, a sole proprietorship is discussed under the following characteristics.
There are many advantages and disadvantages when owning your own business. When you own you own business, it’s known as a sole proprietorship. But with any type of business, there will always be advantages and disadvantages.
Firstly, even though there are different types of partnership such as general, limited and limited liability partnership. This three different type has its advantages and disadvantages however we will be mainly focused on general partnership. One advantage of the general partnership is raising capital due to the nature of the business the partners will raise capital to start-up the business. Therefore more partners mean more capital can be put to the business, this allows the business to have more potential for growth and profitability. Another advantage is that a partnership is less complicated to form and run than a company they don’t have legal filing requirements, this means they don’t have to file accounts and documents with Companies House.