Sole Proprietorship vs. General Partnership vs. Corporation

Sole Proprietorship vs. General Partnership vs. Corporation

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A sole proprietorship is a type of business that is owned and operated by one person who is responsible for all the debts. Forming the business is really easy to start off with. Also the owner receives all the profit from the business and is his or her own boss. The down side to owning a sole proprietor business of your own is it is really hard to find sources for funding the business for it to grow and expand. An example of a local proprietor business is Martha’s Kitchen. Martha’s kitchen is a really small restaurant on the outskirts of town. Martha chose to open a diner at her location because it is joined with a gas station and it is in a remarkable location for a restaurant business. Martha’s kitchen is open from 5:30 a.m. to 11:00 p.m. She serves the best peach cobbler around.

A general partnership is when two or more persons decide to share the responsibility of operating a business together. The partners are also equally responsible for all the company debts incurred by each partner. The combined partners in the business allow the business to grow very easy because it is very easy to find sources for funding and investors. The biggest disadvantage that a general partnership has is the difficulty of transferring ownership or selling out because of having the consent of the other partners. An example of a local general partnership is Rest My Friend Lawn Care. The lawn care business originated as a sole proprietor but now it is a family business with several partners. Blake, Larry, and Tracy chose this type of business because they were able to invest in the business and to this day they are making a great profit out of the business.

Corporations are the biggest type of business out of all three. Corporations are considered to be separate from the owners and they are liable for their own debts. When investors invest in a business they are held liable for only what they invest in the company in event of failure.

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By selling stock corporations have the advantage or raising money. Corporations have it very easy when deciding to transfer ownership. Also corporations can be taken over without the willingness of the owners. They also have a lot of complicated legal requirements that the companies have to meet. Corporations have double taxation which is the biggest disadvantage. An example of a local corporation is Piggly Wiggly. Piggly Wiggly is a local grocery store.
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