Advantages and Disadvantages of Sole Proprietorship – Partnership and Corporation
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ADVANTAGES AND DISADVANTAGES OF SOLE PROPRIETORSHIP, PARTNERSHIP AND CORPORATION
Advantages and Disadvantages of Sole Proprietorship, Partnership and Corporation
Christopher Roberts
American Intercontinental University
ABSTRACT
The Inventor has a great idea and the drive to succeed. He is missing just a few ingredients that one would need to run a successful business. One is that he has limited resources financially and lacks the business sense which he needs to be successful. Also, his product is very similar to other marketable products already in circulation. During his research he will discover three business methods sole proprietorship, partnership and corporations and all of their advantages and disadvantages. Furthermore upon conducting research and weighing all options and all the advantages and disadvantages of each business method, he has decided that what works best for him financially and easiest for someone with little no how is sole proprietorship.
Advantages and Disadvantages of Sole Proprietorship, Partnership and Corporation
Anyone who is serious about starting his or her own business must take a lot into consideration. For starters one must have a plan. The plan must be a real business plan with goals and achievements to be met. The first decision that must be made is whether the business is going to be one of the following: sole proprietorship, partnership or corporation. Each of these principles of business has their own disadvantages and advantages that must be carefully weighed. For example, sole proprietorship is owned and usually operated by one person. They account for about 75 percent of all businesses in the United States. Of all the businesses they only account for about 5 percent of total revenue. A few advantages to sole proprietorship are never answering to no one but themselves. They have low start-up cost and have very simple legal set up procedures and a very appealing form of tax benefits. Anyone can pretty much start by putting something as simple as a sign on their door. They also have no obligation to share profits with anyone else from the business. With advantages also come disadvantages, for example: the owner is liable for all debts incurred by the business. So, for example, if the business fails, creditors can make legal claims not only the business, but also on your personal assets, such as personal savings and any other business you may have. This is a form of unlimited liability. Another disadvantage is; if the owner dies their ownership also legally dissolves. Also, it is very hard to get banks to approve loans, because they are considered high risk. Another business opportunity that one may seek