February 23, 2015
Three types of business structures exist; Partnership, Sole Proprietorship, and Corporation. Essential deliberations are dimensions of the commercial, the method in which revenue from the trade is a tax, the lawful obligation of the proprietors, and the capability to obtain monies to fund the business. Few businesses start-up as a large capacity organization. All business structures have advantages and disadvantages; these differences can help with the determination of the company course. Many do not have the same desires when it comes to opening a business, therefore, one must be aware of the advantages and disadvantages of each structure. This gives those looking toward creating an organization the tools to make an informed and appropriate decision. Choosing a sole proprietorship or running a massive corporation requires knowing the advantages and disadvantages of the structures.
Advantages of a sole proprietorship is the independence of owning one’s business. He or she has no one to split profits with or decision-making to compromise. The owner has full reign over company resources. According to Parrino, Kidwell, and Bates (2012), 75 percent of all trades in the United States are sole proprietorships, usually involving a proprietor with few employees (p. 6). Sole Proprietorship is the simplest form of company to start with the least amount of regulation. The largest advantage is the company is subjective “to lower income taxes than the most common type of corporations” (Parrino, Kidwell, & Bates, 2012, p. 6). Disadvantages entail the debt and costs of the organization. Because the organization is owned by only one, he or she holds full responsibility for paying all debts occurred by the sole proprietor with unlimited liability. This allows creditors to collect debts from the business and personal assets. The personal wealth of the