Types of Business Ownership Advantages and Disadvantages Sole

Types of Business Ownership Advantages and Disadvantages

Sole Proprietorship A business owned by only one person.

Partnership Two or more persons sharing ownership and operation of a business under a contractual agreement.

Corporation An organization owned by many people but treated by the law as though it were a legal entity (“artificial being”, “thing”)

Franchise A legal agreement to begin and operate a new business in the name of a recognized company in exchange for payment, and for the agreement to operate the business as required.

Sole Proprietorship Advantages Ease of Organizing Control over Profits Control over Operations Pride of Ownership Lower Taxes Ease to dissolve

Sole Proprietorship Disadvantages Unlimited Liability Difficulty in Raising Capital Responsible for all Losses Long Hours Working with Insufficient Capital Management Knowledge

Partnership Advantages More Capital Combined Managerial Skills Established Legal Status Tax Advantages Personal Satisfaction

Partnership Disadvantages Unlimited Liability Shared Profits Possible Conflicts Possible Instability Difficulty withdrawing Investment

Corporation Advantages Limited Liability Greater Capital Unlimited Life Specialized and Professional Management

Corporation Disadvantages Increased Taxation Difficulty in Starting Management Problems Increased Government Control

Franchise Advantages Business is already created Parent Company Expertise and Help National Advertising

Franchise Disadvantages Owner Pays the Parent Company a % of Gross Sales No Independence Large Investment