Business Structures

Business Structures
Dorothy Maxwell
December 6, 2015
Kimberly McCarolle

There are three basic forms of business structure - sole proprietorship, partnership, or corporation (Parrino, Kidwell, & Bates 2012).   A sole proprietorship is a company that is owned by one person.   The biggest advantage of a sole proprietorship is that it is the business structure that requires very little to start.   It is the easiest to create and control and if you like being the boss and living the lifestyle of an entrepreneur this is the business structure for you.   The owner has the right to all the profits.   But the biggest disadvantage is the owner has unlimited liability for the company’s obligations (Parrino, Kidwell, & Bates 2012). The owner’s personal assets are at risk because the business is not separate from the owner.   The owner business income will be taxed as personal income and the equity is only from the owner, not the business profit (Parrino, Kidwell, & Bates 2012).
A partnership is a business owned by more than one person; one or more of them financially responsible for the actions and obligations of the business (Parrino, Kidwell, & Bates 2012).   There are different types of partnerships, the most common being general and limited.   A general partnership can be really simple as signing a written agreement between two or more people, while a limited partnership limits the personal liability of each partner to their capital investment (Parrino, Kidwell, & Bates 2012). Some of the advantages of a partnership are: limited protection of the owners’ personal assets, owners’ limited liability for the company’s obligations.   You also have more sources of equity (Parrino, Kidwell, & Bates 2012).   The disadvantages of a partnership are shared control and profit (Parrino, Kidwell, & Bates 2012).
The most complex business structure is a corporation. The varied types of corporations are: general corporations and Subchapter S...