A Business Organization Operated By One Owner Essay
There are many forms of business entities available to entrepreneurs, the main type are sole proprietorship, general partnership, limited partnership, limited liability company (LLC), and corporations. Sole proprietorship is a business organization operated by one owner. For example, you start a landscaping business by yourself.
Advantages of the sole proprietorship
• Easy to create- very few legal formalities, few forms to file with local governments
• Proprietor is in total control of the business management
• Proprietor keeps all the profits, these profits are taxed as personal income
Disadvantages of Sole Proprietorship
• Personally liable for all losses. Difficulty in raising capital.
• The limited life of the business - if the owner dies the business is dissolved
• Unlimited Liability – personally liable for all losses or obligations
General Partnership is an agreement, expressed or implied, between two or more persons who join together to carry on a business venture for profit. Each partner contributes money, property, labor, or skill; each share in the profits and losses of the business; and each has unlimited personal liability for the debts of the business.
Limited Partnership – is an agreement between at least one general partner and at least one limited partner. The general partners assume unlimited personal liability for the partnership’s debt. However, the limited partners are only liable up to the amount they have invested.