Comparison
Chart
The principal advantages
and disadvantages of the three most commonly used business organizations
are as follows:
| Sole
Proprietorship Advantages |
Sole
Proprietorship Disadvantages |
• Low start-up costs
• Greatest freedom from regulation
• Direct control by owner
• Minimum working capital requirements
• Tax advantages to small owner
• All profits to owner |
• Unlimited personal liability
• Lack of continuity
• More difficult to raise capital |
| Partnership
Advantages |
Partnership
Disadvantages |
• Ease of information
• Low start-up costs
• Additional sources of venture capital
• Broader management
• Limited outside regulation
|
• Unlimited personal liability
• Lack of continuity
• Divided authority
• Difficulty in raising additional capital
• Hard to find suitable partners |
| Corporation
Advantages |
Corporation
Disadvantages |
• 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 |
• Closely regulated
• Most expensive to organize
• Charter restrictions
• Extensive record-keeping necessary
• Double taxation, except when organized as an "S Corporation"
• Difficult to liquidate investment |
|
