An Explanation of Different Business Types

A sole proprietorship is a business that is solely ran by one person. “According to data from 2003, there were more than 17.5 million proprietorships operating in the U.S. and those generated $969 billion in revenues” (Hodgetts & Kuratko, 2008). Establishing a sole proprietorship is easy if an owner uses one’s own name or can use a trade name by filing with the city of business.

Financial advantages to a sole proprietorship include all the profits belong to the owner of the business minus taxes, social security and Medicare paid out. Some proprietors have higher credit ratings because both the business and personal assets stand behind them. Lack of restrictions and freedom to run your own business and for some may need to get licensing from the state. Having a sole proprietorship has secrecy on operation sales, financial strengths, and profit margins. Owing your own business brings a lot of personal satisfaction and the success of your business is the amount you contribute to.

Disadvantages to a sole proprietorship include unlimited liability and the debt incurred is the owner’s responsibility. “Creditors have a claim for these debts and can exercise it against both the business assets and personal assets of the proprietor” (Hodgetts & Kuratko, 2008). Since a business’s tend to be smaller for one owner the amount of capital is limited to be raised for operations. Most banks only lend 50% of the business value. Limited life of the proprietorship depends on the individual financial aspect, dies, goes to jail, or chooses to end the business presents risk.

“A partnership, as defined by the Uniform Partnership Act (UPA), is an association of two or more persons to carry on as co-owners of a business for profit” (Hodg...

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...ctivity include “not losing irreplaceable hours of your lifetime to meetings; avoiding the politics of a large and often cutthroat workplace, spending time with family or pets verse working for the business” (Coffey, 2008). A plan of attack would need to be put in place, work space should be divided, installing separate phone lines would help keep work and personal separate, whose home or all homes being used for the three proprietors, as well as insurance for all partners.

Works Cited

Coffey, L. T. (2008, October 1). Solo Act-Setting up a Home Based Business. Retrieved April 12, 2011, from www.today.msnbc.msn.com: http://today.msnbc.msn.com/id/26976151/ns/today-money/

Hodgetts, R. M., & Kuratko, D. F. (2008). Small Business Management. In R. M. Hodgetts, & D. F. Kuratko, Small Business Management (pp. 158,159,161,164,168,177). Hoboken: John Wiley & Sons.