Sole Proprietorship

FIN571 Corporate Finance Week 1: Business Structures
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Business Structures
There are three basic types of business structures that include sole proprietorship, partnership, and corporation. Every business structure has its unique advantages and disadvantages that offer the main factors of considerations when an entrepreneur seeks to form a business.
Sole Proprietorship
This is one of the easiest forms of business to start as it only requires one to obtain a business name and certificate, and it is ideal for those with limited funds. In this type of business structure, the owner has absolute authority over the decision and operations of the entity. Despite the advantages, in sole proprietorship, the owner is not separate from the entity, meaning that one is personal liable for every operation of the business, including the liabilities.
Partnership
The most common types of partnership include general partnership and limited partnership. General partnership could be as easy as forming an agreement between two or more people while limited partnership is where every partner’s liability is limited to their capital contribution to the business. When forming a partnership, it is advisable that the partners seek legal counsel in order to clarify the roles and responsibilities of each partner to avoid misunderstandings that may arise in the future.
General Corporations
It is the most common corporation, where the entity is a separate legal entity owned by stakeholders, who can be unlimited ...