There are four basic types of legal business ownership structures. These are sole proprietorship, general partnership, limited liability company, and corporation. This paper will outline the characteristics of each and provide an example for reference.
A sole proprietorship is formed when one person owns and operates a business on his or her own and is relatively easy to start. (Shah, 2011) A sole proprietor can create their business by procuring any equipment needed and acquiring permits or licenses as required by location. Although they reap the benefits of all profits, they also assume all risks of debt. Sole proprietors are taxed as personal income and can be costly at start up depending on what is necessary. Homestead Pest Management (http://homesteadpestjacksontn.com), located in Jackson, Tennessee, is an example of a sole proprietorship. It is owned and operated by Matt Markowski and he the sole owner.
A general partnership is partnership formed where all owners share in the business and financial aspects of a business. (Shah, 2011) General partnerships can be an advantage because efforts and skills are combined, however, unlike a sole proprietorship, the partners share in the liability and divide profits. Another consideration in a general partnership is conflicts that may arise over business issues. Termination of the partnership could be difficult, thus wise to outline terms of partnership in advance. Porter and Strange Attorneys at Law (http://www.porterstrange.com) is a partnership located in Memphis, Tennessee. Matthew Porter and Amanda Strange run their office jointly and are equally vested.
A limited liability corporation is a business created with a limited number of partners who are only liable for debt accrued by the business not exceeding their investment, holding personal assets free from risk. (Shah, 2011) This type of legal business allows for more financial resources, along with a greater pool of knowledge. Profits and liability of the business...