Advantages and disadvantages of operating a business under each of the three major forms of business ownership

High school
Journalism & Communication
Pages 7 (1757 words)
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There are very many issues to consider when one wants to venture in to a new business. These issues include the location, the type of products or services, the target customers, the form of ownership or structure of the business as well as the capital to invest in.


When planning to start a new business, the most vital issue of consideration is selecting the proper business structure. Regarding the business structure, a business can operate as a sole proprietorship, partnership or a limited liability company. The business structure is important because it affects several aspects of the business. For instance, it affects the types of outside funding, the amount of payable taxes and the amount of personal liability if the business fails. Generally, there is no standard measure of selecting a particular business structure since each structure is unique and difference from the other (Callwood, para 1, 2011).
In the selection of the appropriate business structure, most prospective business people often aims at avoiding some aspects while maximizing on others. For instance, most of them would wish to avoid personal liability, therefore opt for a company.
In addition, others might wish to individually reduce the losses of the business and evade double taxation of the income of, and allocations from, the business, hence opt for partnerships. In addition, a limited liability company may offer most of these objectives (Jimenez, p 1, 2003).
The first step in the planning of a business is to make the decision concerning the kind of ownership proffered. The prospective investor should decide whether he wants to run his business as a sole trader, with a partner or a limited company. ...
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