Doing business in the United States is a way of life for many entrepreneurs and organizations. Businesses are structured in many different ways. The most common business structures in the United States are sole proprietorships, partnerships, and corporations. Each business structure has advantages and disadvantages for the owners.
Sole proprietorships are the most common form of business structure in the United States. The sole proprietorship is owned by one owner and requires very little documentation to get started. The advantage of this business structure is that the owner has complete control of all management decisions and business planning. The owner also enjoys the advantage of personal taxation for the business proceeds. The disadvantage of this structure is that the owner is completely liable for all debts and potential lawsuits of the business extending all the way to the owner’s personal assets.
A Partnership is a business structure that is typically owned by two or more owners coming together in the form of a written partnership agreement to run the business jointly. Partnerships require very little documentation to get started other than the partnership agreement and a business license. The advantages of a partnership are combined capital from the partners, combined experience from the partners and shared liability. Partnerships also enjoy personal taxation benefits from the government. The disadvantage of a partnership is the complete liability for business debts and potential lawsuits by each of the owners extending to personal assets.
Corporations are typically large business structures with numerous owners. Corporations require a vast amount of legal documentation to get started, such as articles of incorporation and corporate bylaws. Corporations have management teams lead by a CEO or Chief Executive Officer as well as a Board of Directors. The advantages of corporations are capital...