Business Structure Essay

458 words - 2 pages

Business Structure
Belinda Sintim
FIN 571
March 14, 2016
David Johnson

Business Structure
When one decides or proposes to start a business, they must decide on the type of business structure that would best benefit the needs of their business. Each business structure has its advantages and disadvantages. The three different business structures are Sole Proprietorship, Partnership and Corporation. Each structure has different set of rules and regulations that the owner or owners have to abide by.
The Sole Proprietorship has the least amount of regulations from federal state or local government that owners would have to follow (Carter, 2016). This form of business structure has one owner. It is considerably ...view middle of the document...

(Carter, 2016)
A Partnership is structured with two or more people who own the business. Unlike the Sole Proprietorship the Partnership allows the burden or the responsibility to be shared among all the owners not just one. Just as sharing the duties and the responsibilities of the company is an advantage it is also a disadvantage because all decision have to be made on one accord. Everyone has to agree and this is where conflict can rise. A Partnership also has unlimited liability, therefore all owners personal assets are not protected when the company is liable for any type of charges or debt. (Carter, 2016)
A Corporation is structured to be a separate entity that is owned by shareholders. Unlike the Sole Proprietorship the Corporation has limited liability protection. This means the owners of the business personal assets are protected from suites against the company. The liability works toward the business as well, meaning the shareholders debts or obligations will not fall on the Corporation. Since the Corporation has it’s own entity, taxes must be filed separately and taxes are paid the company’s profit. Taxes are also paid on the shareholders dividends. This is considered double taxations, one of the disadvantages of the Corporation. (Carter, 2016)
To conclude, business structures have its advantages and disadvantages. When starting a business it is best to know how you want to run your business because that will help determine what structure would be best for the company.

Reference:
Carter, C. (2016). Chron.com. Retrieved from http://smallbusiness.chron.com/advantages-disadvantages-differentbusiness-structures-21149.html

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