Private Business Form Comparison Essay - 1345 Words

Private Business Form Comparison Introduction In the business world, many distinctions separate one firm from the next. Competition, products, services provided is not the only factors that differentiate businesses. Structure and type are another. This paper will discuss and compare the three major forms of businesses (sole proprietorship, Partnership, and C-Corporations) and provide a brief summary of these three forms. Sole Proprietorship. This form of private business ownership carries the most simplistic approach, as inherent in the name. One person assumes complete ownership of this business as well as all financial and decision-making responsibilities. It is the easiest to form as a start-up and has the least amount of legal†¦show more content†¦This same disadvantage, may also pose additional hurdles in the event the business needs to grow, because the owner’s personal credit rating may affect whether lenders will extend credit for the business operations. Banks tend to be reluctant in financing sole prop rietorships, which leaves these owners seeking assistance from other investors or relying upon personal savings, home equity, or reinvestment of company profits. Finally, the owner of the sole proprietorship is left to either rely upon his or her own skill or solicit information through consultations, because they do not likely have the requisite expertise in every aspect of their business (Kurtz Boone, 2013). Partnership. There are at least two types of partnerships: general and limited. General partnerships are virtually the same as a sole proprietorship, with the exception of additional owner(s). They are essentially sharing the unlimited liabilities of the firm. Most of the benefits and disadvantages are very similar to a sole proprietorship, except that there is also the oral or written agreement that exists between the partners (Keown, Martin, Petty, 2014). Limited partnerships are distinguished, in part, by the limited liabilities. This limitation is provided to at least on e or more of the owners, and they are shielded up to the amount of capital they invest into the business (Keown, Martin, Petty, 2014). These forms also must have a general partner, who