Selecting the correct method of incorporating and running a business depends on many variables. Specifically with the sole proprietorship, partnership, corporations, general corporations, subchapter S, limited liability corporation, an analysis of the advantages and disadvantages provides a deeper understanding of companies that operate under these monikers. The diversity of these individual methods well defines the types of businesses they correlate to, further diversifying the types of commerce available in this country.
As a sole proprietorship there is one owner, this owner makes the decisions, receives the profits, pays the taxes as the owner, not at a business level and can sell the business. The advantage is that this is the most inexpensive way start a business, obtain a license and the owner has all the decision making abilities. The disadvantage is that the owner is personally liable for all aspects of the business. The owner assumes all responsibility for contracts, paying taxes, profits, losses and can sell the business at will.
The general partnership involves two or more owners sharing the responsibilities of the company and are “personally liable for the debts and obligations of the partnership” (Cheeseman, 2010, p. 6). Because of the partnership, the advantage is that owners do not have to pay federal income taxes, but the disadvantage is that the owners must record the income, profits, and losses on their personal income taxes. The advantage of the limited partnership is that it limits the personal liability of each partnership which protect their initial investment. The disadvantages are that the partners in a limited partnership are usually just investors and they have little to say about the company day-to-day operations.
Corporations are the most prevalent form of doing business in the United States. Corporations range in size and owners can be one sole