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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


Michael E. Reilly, CPA
©2016 Michael E. Reilly, CPA
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