Business Structure

Business Structure

Business Structure is the framework of a company legally acknowledged in a particular jurisdiction for conducting commercial activities, like sole-proprietorship, partnership, and corporation (BusinessDictionary.com, 2013). There are advantages and disadvantages in each of the three business structure. The purpose for this week one assignment paper is to give an explanation of how it might or might be advantageous from each of the three business structures.

Sole Proprietorship

A sole proprietorship is a business entity managed and owned by one person. This person who owns the business is called a sole proprietor (BusinessDictionary.com, 2013).

The advantages of a sole proprietor are that he or she does not pay any income tax separate from the business, the cost for this person to start his or her business is minimal, the requirements for the business is fewer than for other types of owners, and he or she has complete control on when to transfer or sell the business (BusinessDictionary.com, 2013). As a sole proprietor, control on when to take a vacation or don’t have to answer to anyone is the best feeling ever.

The disadvantages of a sole proprietor are that the owner of the business has to report profits and losses made on his or her individual tax return; he or she is completely accountable for the business’ debts (BusinessDictionary, 2013). As a sole proprietor, one the worst thing is if there is a lawsuit means the owner will be in his or her own to find ways to pay the fines also some investors do not want to invest in sole proprietorships.

Partnership

According to Film Media Group (2011) “there are different types of partnerships, the most common being general and limited. A general partnership can be as simple as a written agreement between two or more people while a limited partnership limits personal liability of each partner to their capital investment.” Hiring an attorney for partnership business structure is very important to obtain legal documents to dictate the responsibility, liability, and the role of each partner in the business.

The advantages of partnership are that it has fewer legal procedures and costs. Two or more people can gather together and come to an agreement in either written or verbally to form this type of business structure (Chinmoy, 2013). Having more than one business owner in partnership allow everyone benefit in increasing the borrowing capacity because of the contribution of funds from each partner (Chinmoy, 2013). The partnership business structure