Four main types of business entities are sole proprietorship.docx

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Four main types of business entities are sole proprietorship, partnership, corporation, andlimited liability company (LLC).Sole proprietorship is when you go into business on your own, in which you become thesole proprietor, the single person at the head of a sole proprietorship (Kubasek 2012, p.794).There are several advantages to a sole proprietorship, one is it requires few legal formalities.With fewer legal formalities, the setup of the company will be quicker than any option. Anotheradvantage is a sole proprietor has complete control of the organization giving them the freedomto hire employees, determine business hours, and expand or change the nature of the business(Kubasek 2012, p.794).The biggest advantage, in my opinion is if you own the business on yourown, you can keep all the profits of the business, and the profits are taxed as personal income.The disadvantage of being the sole proprietor of your business is there is no separate legal entityinvolved, and any debt you accrue through the business becomes your personal debt as well.Because there is no separate legal entity, the sole proprietor can be personally sued creating anissue and puts the business, and the owner as an individual at risk of losing everything. Twoother issues with a sole proprietorship is that if the owner dies, the sole proprietorship ends withthe owner, and funding for the business is limited to personal funds and loans making it difficultto fund the business.

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Term
Fall
Professor
N/A
Tags
Business Law, Corporation, Types of business entity

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