January 19, 2015
When one is considering developing or starting up a business there are different aspects that one must look at, first would be what type of business structure will the business become. If one is an Entrepreneur there are different directions that one can take. However, if there will be other partners, stockholders, or stakeholders then perhaps one might consider establishing one of the corporate business type structures. There are pros and cons to the different business types that will be outlined throughout this paper.
Entrepreneur Business Structure
There are three different types of business structures one could establish as an Entrepreneur. These business types are Sole Proprietorship, Partnership, and Corporation. The sole proprietorship is the easiest legal structure that one can establish (2012). Another advantage of a sole proprietorship would be that there is only one owner who is responsible for the entire operation. One major disadvantage of being the sole owner you are legally responsible for all liabilities and moneys owed by the company and one’s personal assets can be taken to pay the businesses debts (2012). There are two types of partnerships that one may consider and these are general partnership and limited partnership. In a partnership there are two or more owners and together they are legally responsible to manage the company as well as equally responsible for all liabilities and debut that the company occurs (Parrino, Kidwell, & Bates, 2012). An advantage of having a limited partnership would be that one is only liable for the company’s debut up to how much capital they invested. However, to qualify one must not be actively engaged in managing the business.