The business owners select the form of organization form based on the considerations, such as the size of business, the way in which income from the business' taxation, the ability to raise fund to finance the business, and the legal liability of the owners. There are four different types of business structures; sole proprietorship, partnerships, corporations, and Limited Liability Partnership (LLP) (Parrino, Kidwell & Bites, 2012). Start-ups and small business perform as either sole proprietorship or partnerships because of the small operating scale and capital requirements. However, the larger a firm grows, the greater the benefits to organize as a corporation (Parrino, Kidwell & Bites, 2012). This paper will introduce these four different types of business structures stated in the above, and explain how each business might and might not be advantageous. Therefore, this paper will help the business owners, who will start the business, to determine which type of business structures they like to start. This paper will also help the business owners to determine which next path they like to select if their business grows and expand.
Sole Proprietorships A sole proprietorship is a business owned by a single person. A sole proprietorship might provide several advantages as follows: The business owner can start the business with an inexpensive way because there are minimal fees to obtain a business name and certificate. Therefore, business owner can start out with limited funds and hold absolute authority on decision-making (University of Phoenix, 2013). Furthermore, profits, which a sole proprietorship makes, are subject to lower income taxes than are those from corporation (Parrino, Kidwell & Bites, 2012). In contrast, a sole proprietor might not be advantageous due to its responsibilities. A sole proprietor must pay all the firm's bills and