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Business Structure

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Business Structures
Robin Duuring
FIN/571
July 28, 2014
Zhenhu Jin

Business Structures
There are several business structures to consider when looking at starting a business. Each of structures has advantages and disadvantages. By doing, in-depth research on each structure will allow for the best decision on a business structure. A careful consideration of the organizational structures: Sole proprietorship, Partnership, Corporation, S Corporation and Limited liability company (LLC) are advantageous in helping a business to succeed.
Sole Proprietorship Sole proprietorship is the most common business structure. This type of structure is owned and operated by one proprietor. An advantage is that sole proprietorship is a simpler and inexpensive structure to start compared to other business structures. This type of structure is considered a "pass-through" tax entity, where all of the revenues and costs pass through the business to the proprietors, who report their portion of the revenues (or deduct their portion of the costs) on their individual income tax returns (Gaff & Fryzel, 2012). Some more advantages of a sole proprietorship are independence, autonomy, one-decision-maker and an effective management structure ("Sole Proprietorship," 2007). A disadvantage of sole proprietorship is a business and proprietor is one and the same with unlimited personal liability (Gaff & Fryzel, 2012). All pressure of successes and failures is the responsibility of the proprietor. Another disadvantage, capital is harder to secure. In addition, this type of business cannot be handed down to the next generation. Once a proprietor dies, transfers proprietorship, or liquefies the business sole proprietorship ceases to exist.

Partnership
A partnership consists of two or more people who co-own a business. A Partnership has some similarities to a sole proprietorship. Advantages

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