Business Structure

Business Structures

According to "Business Structures" (n.d.), “Business structure is an organization framework legally recognized in a particular jurisdiction for conducting commercial activities, such as, but not limited to sole-proprietorship, partnership, and corporation.”

There are five business structures that include sole-proprietorship, partnership, corporation, S corporation and Limited Liability Company (LLC).

The sole proprietorship is the most common and simplest form of business structures. There is only one owner that manages and make decisions for the whole business operation. The advantages of a sole proprietorship is that the owner has complete control of the business and can easily make a decision. The sale or transfer of the business can easily be completed by the owner. Another advantage is that there are no corporate tax payments, and there is minimal cost to form a sole proprietorship. Finally, there are only a few formal business requirements is necessary to form a sole proprietorship. The disadvantages of sole proprietorship is that the business owner is held solely liable for the debt and obligations of the business and all the business decisions is the responsible of the owner. Another disadvantage of sole proprietorship is that the investors are usually not fond of investing in sole proprietorships (“Advantages and Disadvantages of Sole Proprietorships,” 2007).

The partnership is a form of business structure that is owned by several individuals but not more than twenty. There are two types of partnership, general partnership, and limited partnership. General partnership is where the partners are equally responsible for both the debts and obligation of running the business. A limited partnership is about investors only and does not have control over the company and they do not have the same liabilities as the general partners. There are several advantages of having a partnership such as it is easier to raise funds because there...