Business Structures in the United States
If you have decided to become an entrepreneur, one of the first steps to creating your business is deciding what type of business you will be. Each form of business has advantages and disadvantages. Read the following descriptions and consult and accountant or lawyer to decide which type is right for you.
Sole Proprietorship
A sole proprietorship is a business that is formed by a person who owns and operates it. Usually, it is required that the business name have the owner’s name in it.
- Easy to form with few formal business requirements
- Easy to form with few formal business requirements
- No corporate tax payments
- Owner has complete control over the business
- Owner of business is personally liable and responsible for all debts and obligations associated with the business
- Difficult to find investors
General Partnership
A general partnership is similar to a sole proprietorship, except there is more than one owner involved. All partners are responsible for the liabilities of the business, and they share the profits.
- Financial commitments are shared by more than one person
- More expertise and experience than a sole proprietorship
- Inexpensive to start and few formalities
- Partners are liable for the debts and liabilities from other partner’s decisions
- Partners are personally liable and responsible for all debts and obligations associated with the business
- Business decisions must be discussed and agreed upon by the partners
- Difficult to attract investors
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