Putting It Together: Business Ownership
Synthesis

Summary
In this module you learned about the various legal forms for a business and the advantages and disadvantages of each. The following are key takeaways from this module:Choosing an Organizational Type
Sole proprietorship, partnerships, corporations, and hybrids (LLC, LLP) are all possible options for the legal formation of a business. Each structure carries risks and rewards, costs and benefits. Which form of business ownership is best for an individual depends not only upon the nature of the business opportunity but also the level of personal exposure to risk the owner is willing to accept.Sole Proprietorships
Sole proprietorships are the simplest and most common legal structure for a business. These businesses are owned and run by one person.Partnerships
A partnership is a single business in which two or more people share ownership. There are two general types of partnership arrangements: general partnerships and limited partnerships.Corporations
Although not the most common form of business ownership, corporations account for the majority of the revenue from business in the U.S. They are also the most complex type of organization to start and maintain. Types of corporations include C corporations, S corporations, and B corporations.Hybrid Forms of Ownership
Fortunately there are options that enable the business owner to take advantage of limited personal liability and the benefits of partnership or corporate organization. These include the limited liability corporation (LLC) and limited liability partnership (LLP). Which type of ownership an owner selects will largely be determined by the size, objectives, and vision for the business.Let's take a look at how these different forms of ownership compare to one another.
Sole Proprietorship | Partnership | LLC | LLP | Corporation | S Corporation | |
---|---|---|---|---|---|---|
Owner(s) | 1 sole proprietor | 2 or more partners | 1 or more members | 2 or more partners | 1 or more shareholders | 1 or more shareholders |
Sole authority for decisions | Yes | No | No[4] | No | No[5] | No[6] |
Easy setup | Yes | Yes | Yes | Yes | No | No |
Minimal regulations | Yes | Yes | Yes | Yes | No | No |
Single taxation | Yes | Yes | Yes | Yes | No | Yes |
Easy access to expertise | No | Somewhat | Somewhat | Somewhat | Yes | Yes |
Easy access to capital | No | Somewhat | Somewhat | Somewhat | Yes | Yes |
Limited legal liability | No | No | Yes | Yes | Yes | Yes |
Unlimited life | No | No | Possible | Possible | Yes | Yes |
Easy transfer of ownership | No | No | No | No | Yes | Yes |