Legal Forms of Business

The decision to decide on what type of business organization to select for the situation to be most successful can be difficult because it is hard to predict the future on how things will unfold. With seven different forms of business to choose from and all with specific advantages to polices, financial structure, and risk it is important to know the advantages and disadvantages. Each situation has a preferred choice and liability and one or two plus people must research and justify why they prefer the corresponding business form.

Sole Proprietorship
“The sole proprietor is an unincorporated business with one owner who pays personal income tax on profits from the business. With little government regulation, they are the simplest business to set up or take apart, making them popular among individual self- contractors or business owners (www.investopedia.com).” A Sole Proprietorship is the simplest, most common, oldest form of business to be owned and operated. This form of business is most times fairly small and viewed as excellent for first time business owners and because of the few legal requirements or documents needed. In this type of business there are usually traditional things that customers see on a day to day basis. For instance, the owner or manager greeting people at the door or organizing things to attach the business to the society, towns, or neighborhoods around them.

“The benefit of the sole proprietorship is the tax advantage. The disadvantage of a sole proprietorship is obtaining capital funding, specifically through established channels, such as equity (selling shares) and obtaining bank loans or lines of credit. As a business grows it often transitions to a limited liability company (LLC) or S corporation (www.investopedia.com).”

Partnership

A partnership is a for-profit business association of