Business Forms

Business Structure

Within the business community there are three primary types of business structures; Sole proprietorship, Partnership, and Corporation. Within each, there are sub-structures but this paper will primarily address the primary types.

A sole proprietorship is a business that is owned by a single person. A partnership is just what it states, a partnership between two or more individuals, while a corporation is a business that for a publicly owned corporation, has multiple owners in the role of shareholders. A privately owned corporation is not publicly traded and has a limited number of shareholders. The sole proprietorship is the least complex as it has one owner, while the corporation, having multiple owners is the most complex. Within the corporate structure, there are two major subtypes, privately owned and publicly owned. Privately owned corporations are not traded on the open market or stock exchange but publicly owned are (Parrino, Kidwell, & Bates, 2012). Thus in the corporate structure, publicly owned corporations are more involved as they have a greater amount of owners.

There are advantages and disadvantages with each business structure. These range from the degree of control to the amount of liability the owner(s) is or are responsible for. A straight sole proprietorship has the advantages of single owner so it is easier to control, the owner has the right to all the profits, and it is also the easiest to create and dissolve (Parrino, Kidwell, & Bates, 2012). However, it also is the most risky, as in a straight sole proprietorship, the owner’s personal assets are at risk. “You are liable for everything. You’re personally liable.” (Films on Demand, 2012). Additionally, the owner has unlimited liability for ...

... middle of paper ...

...hat size of business is being considered or what level or stage of development is the business in? Many business start as sole proprietorship and then, as it grows, changes to a partnership and ultimately a corporation. Some might start as a partnership and then become a corporation. Alternatively, some might start as a sole proprietorship and develop to a corporation. These decisions are incumbent upon the owners to decide.

Works Cited

Films on Demand. (2012). Corporate Business Structure [Multimedia]. Retrieved from Films on Demand, FIN571-Fundamentals of Corporate Finance website.

Parrino, R., Kidwell, D.S., & Bates, T.W. (2012). Fundamentals of Corporate Finance (2nd ed.). Hoboken, N.J.: John Wiley & Sons.

Wiley. (2012). Fundamental of Corporate finance - Student companion [Multimedia]. Retrieved from Wiley, FIN571-Fundamentals of Corporate Finance website.