When entrepreneurs set out to start a business venture, many of them start with a sole proprietorship. A sole proprietorship usually involves a single person who runs a business on his or her own. Sole proprietorships are small businesses that often take off to form larger business entities when the owner desires to do so or when the right opportunities are presented. Some of the disadvantages of having a sole proprietorship are the simplicity of operating the business, ability to have complete control over business affairs, increased personal income, and simpler government regulations to follow. The disadvantages are the unlimited liability the owner has, the possibility of losing personal assets invested, and limited life (Fay, 1998). An entrepreneur must be willing to take risks when venturing out to start a new business on their own. Time, money, and hard work must all be invested in order to start a sole proprietorship considering the fact that the owner is doing most of the work alone. Some prospective business owners desire to start small businesses that will allow them to offer their goods and services. Sole proprietorships are good starting points for individuals who desire to start a business. When opportunities come about, these entrepreneurs will then consider moving on to a larger business entity. General Partnership
In some cases, two or more people may have a business idea that they desire to pursue. In this case, they may choose to start a partnership. A partnership is a business enterprise that usually requires two or more people to start a business. Fay defines a general partnership as “a business structure where each partner is liable beyond what he or she has invested in the enterprise (Fay, 1998).” Some of the advantages of starting a partnership are that profits and losses are shared among partners, not a taxable entity, and the fact that each partner is liable only to the extent of the amount each has invested into...
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