Sole-Proprietorship

The business run by one individual

for his/her own benefit and the owner and the proprietorship
Brief
are the same.
Description
Ex: The doctor opens the business and practices his license.

• Easy to set-up since it does not need to fill of any paper.

• It does not require the registration of proprietorships from
States.
• Revenue is only taxed once on the owner's personal tax
returns.
Advantages
• The owner makes all decisions and has complete control of
the business.
• Tax forms are simple.
• It is easy to liquidate assets when the owner is passed away.

• The only responsibility for unlimited legal liabilities is the

owner who may lose his/her home, car, and other personal
assets if he/she loses a lawsuit.
• Duration is short. The business will be liquidated upon the
Disadvantages death of owner.
• It can not be transferred to someone else.
• It can not accept capital from outside investors.
• It is more difficult to borrow money from the bank.
 General Partnership

It is an agreement between two or more people who

join together to carry on a business endeavor for profit.

• It is easy to form.
• This set-up can bring together a group of individuals
with different talents. Since they are all equal and share
in the responsibilities of everything within the company,
they can monitor each others closely to bring out the
best of them.
• The partnership can still exist when one of the
partners dies if the partnership agreement is permitted.
• It can be transfered ownership.

• All partners are responsible for unlimited liabilities.

• There will be a problem in making decisions since they
will not always agree with each others. It will lead to
management conflicts.
• Partners will not feel they are being adequately
compensated for their contributions and services in
sharing profits at all times.
 Corporation

•A corporation is a legal entity separate from its owners and

managers.
•File papers of incorporation with state.
Charter
Bylaws
•The rights of stockholders are very limited.
•The Corporation can sue their parties and can also be sued.

• Debts of the corporation are separated from owners' personal

liability. Shareholders may only lose the amount of their
investment in the company.
• The company has more access to financial resources including
selling stock to praise capital, applying for loans from the bank
easier, and issuing bonds for long-term financing.
• It can be transfered ownership easily.
• It is better able to attract more talented and skilled employees
than proprietorships.
• Duration can be long as long as the owner and shareholders
want.

• The business structure is complex and required a lawyer for

setting-up.
• Double taxation can be applied to earnings.
• Costs of organizing this business are higher.
• The corporate charter restricts operation to the state where it
was issued, unless there is permission from other states.
 Limited Liability Company (LLC).

LLC is a mixture between a corporation and a partnership.

All members of an LLC have operational flexibility and
income benefits similar to a partnership and limited
liability exposure.

• There is limited liability for owners. Judgments and

defaults on company debts do not affect the owners'
personal assets.
• The owners can choose how to pay taxes either the same
as a proprietorship, a partnership, or a corporation.
• LLC is not required to have Anual Meetings by most
states.
• LLCs' structure are not required to have a board of
directors.
•There is unlimited in the number of shaholders.
• It is easy to form.

•Comparing with proprietorships and partnerships, the

Legal and accounting costs are much higher.
• Owners have to create an operating agreement that
defines management authority and limits to making
decisions.
• When there is a death of a member within LLC, the
business will be stopped unless otherwise specified in the
operating agreement.
• It can not make a public stock offering.
• Ownership transfer is more difficult than the corporation.