Southwest

BUSN 5000

Assignment #2

Angela Grubbs

11 April 2010

Types of Business Ownerships

There are basically three types or forms of business ownership structures for new small businesses: Sole Proprietorship, Partnership, and Private Corporation. Two other types of ownership of interest to entrepreneurs include S Corporations and Limited Liability Companies (LLCs). This discussion will contract the difference between the types of business ownerships and elaborate on the Limited Liability Company selected for the small business created for the course BUSN 5000.

A sole proprietorship is a business owned and operated by a single individual and it is the most common form of business structure in the United States. The advantages of a sole proprietorship include the ease and cost of formation. This involves simply announcing you are in business and requesting any licenses and permits you may need. Another advantage is use of profits. Since all profits from the business belong to you exclusively, the owner, flexibility and control are at your disposal. You make all the decisions and direct the entire business operations; very little government regulations and provides ease of ending the business. The disadvantages include unlimited liability. All business debts are personal debts, meaning you could lose everything you own if the business fails or loses a major lawsuit. This type of ownership has limited sources of financing. It is based on your creditworthiness. The sole proprietor really must be a “jack-of-all-trades,” such as manager, marketer, accountant, etc. Finally, it incurs a limited lifespan, the business ends when the owner dies or dissolves the business.

The second type of business ownership is a partnership. This type of business is owned and operated by two or more people. This is the least form of business organization in the United States. There are two basic types of partnerships, general and limited. In a general partnership, at...