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Intro to Business

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Ownership Structures
By
Martha Linn
Intro to Business in a Tech World
Professor Timothy Hawley
2 July 2013

The four main types of business ownership are: 1. Sole proprietorship 2. General partnership 3. Limited liability company(LLC), and 4. Corporation
These differ from each other in many ways: how many owners, risk and liability, the ease in which they are set up and dismantled, and the ways they are taxed. In the following paragraphs I will attempt to explain and provide examples of these four types. In the case of sole proprietorship, the explanation is self-evident. One person owns a business and is in total control of all of the decision making, the risk and the liability. Any income is taxed as personal income, and all costs are assumed by the single owner. An example of this would be my friend Jenalea Johnson’s etsy.com store Jena’s Jems. She makes beautiful hand crocheted items for babies and adults, photographs them herself, and then displays them in her online store. She is responsible for all of the merchandise, the picture quality, the shipping costs, and the complaints from customers, if there are any. And her profits, if she realizes any, are taxed along with the income she receives from her “day job”. A general partnership is slightly more complicated in that you have two or more people involved in the business. All the owners of the business share in the financial obligations of the business. This is a common occurrence in the medical world, where two physicians partner together to open an office. Like a sole proprietorship, it is very easy to start up, with few legal documents involved other than a partnership agreement between the two(or more) partners. All partners share in the profit/debt/tax. The next step up is a limited liability company, or LLC. The dentist that I take my girls to is in an LLC...

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