| There exist three basic types of business structures. | | | | stockholders (or shareholders). |
| One should know the basic forms before getting into a | | | | Usually a corporation may have many owners and |
| business situation to avoid potential problems. The | | | | they usually employ professional managers. The |
| three basic types of business structures are as | | | | owner's risk is usually limited to their personal |
| follows:i) Sole Proprietorship: | | | | investments and they often have very little influence |
| This type of business is owned by one person who is | | | | on the business decisions. However, the corporation |
| called a proprietor. The proprietor manages the | | | | veil may be pierce if the corporation is negligent in its |
| business. Some disadvantages are as follows: the | | | | operation.b) The next corporate form is the Limited |
| proprietor assumes all risks of the business and | | | | Liability Corporation (LLC). Thisstructure is different for |
| personal assets can be taken by creditors. One major | | | | the general corporate form. As the name implies, |
| advantage of the sole proprietorship is the owner | | | | liability is limited in this form as in relation to the general |
| makes all the decisions.ii) Partnership:a) The general | | | | corporate structure.c) Finally, there exists the non-profit |
| partnership business structure is owned by more than | | | | corporation. These types of corporationsare normally |
| one person. | | | | 501(c) such as a church, community based |
| One or more partners may manage the business. As | | | | organizations, a public high school, YMCA, and the like. |
| to disadvantages, like the sole proprietorship, partners | | | | The tax structures are normally different for the profit |
| assume the risks for the business and their assets | | | | making organization as in relation to the non-profit |
| may be taken by creditors. Additionally, partners may | | | | making corporations. |
| disagree about the best way to run the business, | | | | Before any business decision is made it's best to |
| which could result in a conflict. An advantage of a | | | | consult a professional in the area such as an attorney |
| partnership is the owners share risks and decision | | | | who specializes in the field of business formation. |
| making.b) There is another form of business structure | | | | There are also some business consulting firms where |
| in the partnership arena, which iscalled the Limited | | | | help may be obtained. The Small Business Association |
| Liability Partnership (LLP). This form is different from | | | | also has a group of individuals available to help known |
| the general partnership structure. Liability is limited to | | | | as, Service Corps of Retired Executive (SCORE), or |
| the assets of the partnership in this business form.iii) | | | | Counselors to America's Small Business. |
| Corporation:a) The general corporation is owned by | | | | |