The owner has complete control and excision-making powers over the business are one of the biggest advantages of this business structure. Few formal business requirements, easy to set up, no corporate tax payments are other advantages. Another attraction for this structure is how easy it is to sell or transfer the business, and Is done as the discretion of the sole proprietor (owner). These advantages make It an attractive option for many new business owners with limited capital, or who find it difficult to find investors for their business. However, there are also disadvantages of this structure. Limited liability for the owner means that owner Is personally held liable for the debts and obligations of the business (liabilities. Com, 2007). A partnership is described as a business or organization where two or more people share ownership. There are two types of partnerships general and limited. In general partnership duties of profits, liabilities, and management are divided equally. In a limited partnership or ALP this gives some partners the choice of limited liability, but then they also have limited input in decision making of the business.
The advantage an ALP has over a general partnership is its limited liability. Partnerships like proprietorships are easy and inexpensive to set up, and since there is more than one owner It Increases the access to capital for growing the organization. A partner’s share of business tax losses maybe offset against others personal Income. It Is also relatively easy to dissolve/exalt and recover your share. On the other hand, there are a few disadvantages to a partnership. There is a higher potential for dispute as business decisions, profit sharing are split between partners.
General partners have unlimited personal liability, whereas in a ALP there is limited liability up to the partners investment. (“Partnership”, n. D) The last business structure Is the corporation. There are three types of corporations; general corporation which Is the most common type, chapter S Corporation, and a limited liability corporation. A general corporation is a separate legal entity owned by stockholders. Owners are personally protected from creditors of the business, as the corporation is a separate legal entity.
There is easy transfer of ownership and does not affect the management. A corporation also has tax benefits such as insurance, travel, and retirement plan deductions. Also It Is easier to raise capital through the sale of bonds a corporation, there are more legal formalities, as well as increased state and federal regulation for the corporation. Another disadvantage is double taxation on the corporate level and stockholders personal level (“Different Types Of Corporations: Advantages/ Disadvantages Of Corporations”, 2014).
An S corporation is not a different type of corporation; it has the same advantages ND disadvantages of a general corporation with an added incentive of a special tax provision. There is no double taxation in an S corporation as all income and loss is reported only on the personal tax returns of shareholders (“Different Types Of Corporations: Advantages/ Disadvantages Of Corporations”, 2014). Limited Liability Company (LLC) it combines the advantages of corporations and partnerships. The advantages of a LLC are the limited liability, protection of personal assets, great flexibility in management and organization, taxation on personal.