Description of Six Different Types of Business Organizations
The Purpose of this report is to differentiate the seven characteristics of six different types of business organizations
Sole proprietorship is a single owner form of doing business and is the most common business organization model in the United States. Sole proprietorship is defined as a single owner form of business and as such the business is not legally distinguishable from the owner. The major advantage of sole proprietorship as a business model is it is the easiest and least expensive form of business to create. Other advantages include the owner has complete autonomy in making decisions regarding business operations, growth and or expansion is controlled by the owner, and any and all profits are at the discretion of the owner. The major disadvantage to this type of business is the owner is at full risk in any litigation arising in relation to the business. Other considerations to sole proprietorship include raising capital for expansion, equipment purchase, or other business needs will be based on the sole proprietors ability to borrow funds from lenders and cannot include partners as a source of capital or financial support. The business exists at the desire of the owner and cannot be passed along to another person or entity in the event the owner cannot continue the business.
Liability – The total liability for debt or other obligations is the sole responsibility of the owner of a sole proprietorship. This could be viewed as the biggest disadvantage. Personal assets are at risk. Houses and other personal property including the assets of a spouse or partner could be at risk if the business /owner is sued or involved in other liabilities.
Income Taxes – Taxes are paid by the owner on the income at individual income subject to personal income tax rules. Since the owner is equal to the business the owner could possibly pay taxes on income even...