Sole Proprietorship, General Partnership, Limited Partner, Limited Liability Company, and Corporation
April 15, 2013
Sole Proprietorship, General Partnership, Limited Partnership, Limited Liability Company and Corporation
Corporation, Limited Liability Company, General Partnership, Limited Partnership and Sole Proprietorship are the most common forms of business structures. If one was considering a business, then it would be advantageous to understand the fundamental makeup of business organization. In addition, one would need to understand the legal aspects and liabilities associated with each type of business structure.
If a business had the misfortune of being named in a lawsuit, there are advantages and disadvantages to each type of business structure. The table below lists some of the major advantages and disadvantages of each.
Type of Entity Advantages Disadvantages
Sole Proprietorship -The owner is responsible for self only, if no employees.
-Ease of record/accounting and agreements.
-Not liable for other's acts. Business is easily terminated. -Liabilities include all personal income and properties.
-This type of business is the individual owner.
General Partnership -Share financial burden.
- Can control the nature of relationship in regard to duties/responsibilities by drafting agreement -Liable for partner's deeds or misdeeds.
-Liability includes all income and property both individual and jointly owned
Limited Partner -Responsible only for the capital contributed to business
-Not involved in the operation of business -Possible loss of investment
Corporation -No personal income or property liability
-tax advantages -If corporation accused of defrauding creditors, possibility of "pierce the corporate veil
(Adapted from Seaquest 2012)
If one experiences a lawsuit such as...