Types of Business Ownership
Sole Proprietorship:
A sole proprietorship is a business that has one owner. An advantage of a sole proprietorship is that the owner makes all the decisions for the business. A disadvantage is that if the business cannot pay its obligations, the business owner must pay them, which means that the owner could lose some of their personal assets (e.g., house or savings).
* Sole proprietorships are easy to form.
* They end when a partner dies or leaves the partnership.
Partnership:
A partnership is a form of business ownership that has at least two owners (partners). Each partner acts as an owner of the company, which is an advantage because the partners can share the decision making the risks of the business. A disadvantage is that, as in a sole proprietorship, the partners’ personal assets could be lost if the partnership cannot meet its obligations.
* Partnerships are easy to form.
* They end when a partner dies or leaves the partnership.
Corporation:
A corporation is a business owned by stockholders. The corporation may have only a few stockholders, or it may have many stockholders. The stockholders are not personally liable for the corporation’s debt, and they usually do not have input into the business decisions.
* Corporations are more difficult to form than sole proprietorships or partnerships.
* Corporations can exist indefinitely.