SOLE PROPRIETORSHIP PARTNERSHIP CORPORATION Types of Business Ownership

SOLE PROPRIETORSHIP

PARTNERSHIP

CORPORATION

Types of Business Ownership

Making the Decision

When a person decides to start their own business they first must decide how the

ownership of their business will be legally organized.

The Choices

Sole Proprietorship – a business owned by one person.

Partnership – a business owned by two or more

people.Corporation –

a business that operates as a legal entity that is separate form its owners and is treated by law as if it were an individual person.

Sole Proprietorship

One ownerOldest and most common type of

ownership75% of all businesses organized today

in the U.S.Most are small businessesStarted by entrepreneursMany are service based

Sole Proprietorship - Advantages

Easy to Set-UpSimple LicensingFew Government RegulationsTotal ControlProfits to OwnerProfits Taxed Once

Sole Proprietorship - Disadvantages

Limited CapitalUnlimited LiabilityLimited Human ResourcesLimited LifeHigh Income Taxes

Partnership

Business owned by two or more people

Partnership agreementPartners decide how to divide profits5% of all business organized in the U.S. today

Some become CorporationsGeneral Partner/Limited Partner

Partnership - Advantages

Easy to Set-UpMore Skills and KnowledgeAvailable CapitalTotal Control by PartnersProfits Taxed Once

Partnership - Disadvantages

Unlimited LiabilityPossible Disagreement Among Partners

Shared ProfitsLimited Life