| ADVANTAGES
AND DISADVANTAGES OF DIFFERENT FORMS OF BUSINESS ORGANIZATIONS
The principal advantages and
disadvantages of the three (most commonly used business
organizations)
|
| |
SOLE PROPRIETORSHIP |
PARTNERSHIP |
CORPORATION |
| Advantages |
- Low start-up costs
- Greatest freedom from regulation
- Owner in direct control
- Minimum working capital
requirements
- Tax advantage to small owner
|
- Ease of formation
- Low start-up costs
- Additional sources of venture
capital
- Broader management
- Limited outside regulation
|
- Limited liability
- Specialized management
- Ownership is transferable
- Continuous existence
- Legal entity
- Easier to raise capital
- Unity of action account having
centralized authority in board of directors
|
| Disadvantages |
- Unlimited Personal liability
- Lack of continuity
- More difficult to raise capital
|
- Unlimited personal liability
- Lack of continuity
- Divided authority
- Difficulty in raising additional
capital
- Hard to find suitable partners
|
- Closely regulated
- Most expensive to organize
- Charter restrictions
- Extensive record keeping
necessary
- Double taxation, except when
organized as a "S Corporation"
- Difficult to liquidate
investment
|
