Sole Proprietorship

A sole proprietorship is a type of business structure where one individual serves as both the owner and the manager of all financial commitments and debts incurred by the company (Junrui & Yapeng, 2016). There is only one individual involved in the business operation. As a result, one person owns all the profits and is required to keep them for personal use. Being personally liable for debts indicates that a creditor has the right to file claims against both personal and commercial assets with the goal of paying off the debts. This form of business is very easy and not expensive to register. This is because the only information, which is required for the documentation process is that of the owner of the business. Further, the regulatory burden for the business is very light for use in the organization. An individual also has a direct control in the entire process of decision making in the firm (Korobeynikova & Sadykova, 2015). Therefore, there are no lengthy procedures, which are involved when making the various decisions for the business. This translates to the high flexibility level in terms of dissolution and formation of the business. The establishment could be as easy as printing the business cards, and it could be as simple as dissolving in times of difficulties.
The capital, which is required for the start-up is very minimal. Further, there are tax advantages in case the business is not performing at a high level as expected. Such includes the reduction of the bracket for tax in times of low profits and losses can also be deducted from the individual income (Junrui & Yapeng, 2016). In addition, the owner does not share any profits with another person. Hence, profits go to an individual directly. There also very few regulations, which are exerted by the federal and local authority in sole proprietorship business. On the same, income taxes do not exist in the corporate.
Disadvantages
The business has unlimited liability. Therefore, in cases of business debts, it is possible to have claims, which are made against personal assets. These have to be paid to ensure that the business is in a good position to enjoy a continuous performance and success in the market environment. The income is also taxed based on the personal rate (Korobeynikova & Sadykova, 2015). When the business is profitable, it implies that a higher tax bracket could be involved. The owner is the one who is in charge of business operation. Hence, the business may fail to continue when he or she is not available. This depicts that such businesses tend to have a limited life in the business world. There could also be challenges for an individual to raise the needed capital for start-up. This is because the major source of funding for the business is personal loans and savings.
Partnership
A partnership relates to a business, which is not incorporated, but it is established by more than two individuals. As such, the financial resources tend to be combined with those obtained from the business partners and included in the entire business. These partners are involved in running the business as a single unit. Different types of partnerships exist, but these tend to differ on the basis of management control and personal liability. The partners are involved in sharing the profits in accordance to the existing legal agreement, which is made between the two parties (Whitley, 1990). All the parties have the liability of the debts incurred for the general partnership. In limited partnership, it is an individual who contributes to the success of the business without having any active involvement in the business operations. There is also the limited liability partnership, which is extended to group of professions that include doctors, accountants, and lawyers. In the process of establishing a partnership, there is a need to have the agreement set in place. This is paramount since it facilitates in ensuring that partnership terms can be understood and disputes are resolved early.
Advantages
This is an easy and not expensive form of partnership, which helps the parties to run a successful business organization. Further, the start-up costs tend to be shared equally among the partners. There is also equal share in the assets, profits, and management (Whitley, 1990). This helps in boosting the performance of the business organization since the parties can agree on how to run the business. There is also a tax advantage when the partnership income is low or when there is a loss of money in the partnership business. Synergy is present in partnership since there is the room for the potential to be enhanced from value creation that results from the combination of strength from the partnership. Such includes have a chance to access large amounts of capital to run the business. Partnerships also tend to have minimal regulations as compared to the corporations.
Disadvantages
Unfortunately, a partnership does not create any legal difference between your business and yourself. There is also unlimited liability, which facilitates in the management of personal assets and business debts with a lot of success. Nevertheless, general partners tend to have an individual responsibility of business obligations and they could create a personal risk. It could also be complex to establish a partner who is suitable for the running of the business activities for the partnership (Schlemper et al., 2014). Furthermore, there could be cases of having a possible conflict development between a person and the partners. An individual is also held financially responsible in the decision making process among the partners. Such a situation emerges when the contracts are not honored. Moreover, partnerships tend to have limited life. The situation occurs upon the death or withdrawal of a partner from the business. Conflicts or disputes, which could emerge in the partnerships may result into the dissolution of the business.
Corporation
Another form of business structure is the corporation. A corporation could be established at either a provincial or federal level. As such, when a business is incorporated, it is then considered to be a separate legal entity from the shareholders (Gërguri-Rashiti et al., 2017). A corporation shareholder is not liable personally for the obligations, debts or corporation acts. Therefore, it is always a good thing for an individual to seek adequate legal advice prior to incorporating. Shareholders own the public corporations, but elect the board of directors, which has the responsibility of overseeing the functionality of the business. These include the for-profit, standard, not-for-profit, and charitable corporations.
Advantages
This is a limited liability business structure, which implies that the business is a separate entity from the owner. As such, there is a room for the transfer of the ownership of the business by ensuring that continuous existence is ensured successfully in the business organization. In case of a legal litigation or suing of the corporation, the shareholder's liability is limited to the value of the corporation stock (Dudin & Lyasnikov, 2012). The business structure also has an easy way of raising capital as compared to other existing business structures. There is also the room for tax advantages. Such is because for the incorporated business, the taxes could be lower than expected. The commercial life of a corporation is unlimited. This is because the entity is independent from the ownership, which implies that it is not dissolved in case of a change in the ownership. It is also possible to raise great capital via the sale of the stocks, as well as transferring the ownership by selling the stock.
Disadvantages
The business structure has the limitation of having a close regulation. Thus, the cost of establishing a corporation is higher as compared to other forms of business. Such includes the extensive corporate records, which include the document for the annual government fillings. Government agencies, which include the state, local and federal tend to have a closer monitoring of the corporations, but complying with the associated regulations tend to be expensive. There could also be a situation of conflict among the directors and shareholders of the corporation. Because of the legal requirements, there is a need to have a prove of the citizenship and residency of the directors of the business (Chen & Qi, 2016). The operation and organizational costs are high. This is experienced in budgetary challenges where the corporations have to meet the clerical and legal expenses in order to become successful in business. Moreover, double taxation is an issue, which could emerge in corporations. This is common in times when firms make a declaration of tax payment based on the corporation net income. This is paid by concentrating on the corporate income tax returns. When the corporation individual shareholders are paid dividends, the shareholders have to engage in the declaration of the income for the dividend in terms of paying for taxes and personal income. This is what leads to double taxation.
Limited Liability Company (LLC)
This form of business organization has both the characteristics of a partnership and a corporation. However, it cannot be considered as a corporation since it is not incorporated (Schlemper et al., 2014). Nevertheless, the owners of this business structure tend to enjoy limited liability as the one, which exists in the corporation. Further, a LLC could opt to be taxed as a corporation, partnership, or sole proprietorship business.
Advantages
Owner's personal assets are protected from any form of financial liability, as well as personal liability. Thus, the members are fully protected from any form of financial loss, which may incur if the firm does not comply with specific regulations or engages in wrongdoing. However, situations exists that can make the owner of an LLC be held responsible (Gërguri-Rashiti et al., 2017). These circumstances include illegal or reckless business activities in a fraudulent manner, or the failure to have a good separation of the LLC activities from personal based affairs.
In LCC, there is no room for double taxation as the one, which is experienced in the corporations. Such is because the taxation of profits occurs at the member level and run by the federal government and not based on the level of the company (Dudin & Lyasnikov, 2012). Furthermore, the members are restricted from enjoying deductions based on losses incurred through personal returns. Moreover, there is room for higher level of flexibility since state requirements do not have to be met in the operation and formation as those of the corporation. As such, the members of LLC have room for developing their independent agreements on duties and responsibilities, as well as the form of how the profits have to be divided in the organization.
Disadvantages
LLC have the limitation of the lack of uniformity among states with regard to the established regulations. As such, companies operating in different states may face conflicting requirements on how their businesses are run in these localities. LLCs also have to work extra hard to find sources of capital and investors (Chen & Qi, 2016). This is because the business needs a lot of capital to be established, which has to be sourced from different areas by the members. The fees payment of LLCs is also high as compared to other forms of business entities. This includes having a government regulation, which focuses on the protection of the LLCs. In addition, there is absence of case law among the LLCs because the business form is relatively new. Moreover, it is impossible to have a good prediction of the same in the courts, but some laws are established, which govern the business operations of the LLCs.





References
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Dudin, M. N., & Lyasnikov, N. V. (2012). Systematic Approach to Forms of Interaction
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Gërguri-Rashiti, S., Ramadani, V., Abazi-Alili, H., Dana, L., & Ratten, V. (2017). ICT,
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Junrui, L., & Yapeng, W. (2016). Analysis on Business Organizational Form and Development
of Waterfowl Industry. Asian Agricultural Research, 8(8), 27-34.
Korobeynikova, E. V., & Sadykova, L. M. (2015). Prospects Of Development Of Bancassurance
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