Business Structure Differenciations Essay

805 Words Dec 9th, 2013 4 Pages
The business owners select the form of organization form based on the considerations, such as the size of business, the way in which income from the business' taxation, the ability to raise fund to finance the business, and the legal liability of the owners. There are four different types of business structures; sole proprietorship, partnerships, corporations, and Limited Liability Partnership (LLP) (Parrino, Kidwell & Bites, 2012). Start-ups and small business perform as either sole proprietorship or partnerships because of the small operating scale and capital requirements. However, the larger a firm grows, the greater the benefits to organize as a corporation (Parrino, Kidwell & Bites, 2012). This paper will introduce these four …show more content…
Furthermore, there is the limitation to invest the amount of equity capital in the business, which might restrict possible growth. It is also difficult to transfer ownership of a sole proprietorship that the owner must sell the company's assets, which might cause the reduction of the price that the owner receives for the business (Parrino, Kidwell & Bites, 2012).
Partnerships
Partnership comprises of two or more owners, who have united legally to manage business together. There are two types of partnership; general and limited (University of Phoenix, 2013). Advantages and disadvantage of general partnership are the same with ones that a sole proprietorship holds. However, there is one disadvantage, which is all partners hold unlimited liability for the partnership's debts and actions in whatever proportion of the business partners own or however the debt or obligations may occur (Parrino, Kidwell & Bites, 2012). Conversely, the limited partners have limited liability, which might be advantageous. A partner can be only capital contributor either the amount investors to qualify for limited partner status (Parrino, Kidwell & Bites, 2012).
Corporations
Corporation is the legal entity, and authorized under charter of a state. There are general corporation and Subchapter S corporation in a corporation. Corporation's

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