| Sole Proprietorship | Description | Sole proprietor is most common way of doing business owned by single owner not incorporated. | Two Advantages | Easy to create. No time or costs simply start doing business.Autonomy owner is the business. Easy to make decisions. Own hours, grow as big or stay little. Owner decides. | Two Disadvantages | If owner dies business dies. Only one person hard to raise capital.Because it is one person, if you don’t have individual wealth the business will have to suck funds from somewhere else. | Liability | Owner is 100% liable for the business, no difference between owner finances and business finances. | Income taxes | Taxes are same as owner/business. You would pay taxes through owner’s income.
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Tax planning is limited with general partnership. | Continuity of the organization | Partnership can be terminated at any time by a partner. Death would terminate, all credits and contracts need to be filled before partnership is terminated. | Control | Each partner can act in behalf of the Business. Some discussion is need. Both partners need to agree, like addition of new partner, sell of business property are examples. | Profit retention | All profits are generally shared as well as losses. Retention belongs to each partner as to what they can retain. |
| Limited partnership | Description | Limited Partnership is an unincorporated partnership between two or more people with at least one general partner and one limited partner. | Two Advantages | A way for a general partner to maintain control and raise money.Profits are distributed based on amount each has invested. | Two Disadvantages | Still unlimited liability for general partner.No input from limited partners. They don’t help on a day by day basis. | Liability | General partner has unlimited risk.Limited partner only risks amount of the investment he contributed. | Income taxes | Pass through business on income taxes, like general partnership except they will only report their portion of profit or loss. Must file informational tax return. | Continuity of the organization | General partner can dissolve at any point. Limited partners cannot be dissolved, creditors, contracts