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Business Organizations

Each form of business organization has its strengths and its weaknesses. Consult the chart below as a guide.





Sole Proprietorship

Non incorporated business owned and run by one person.

Ease of startup.

Ease in management.

Decisions made quickly

Get all the profit yourself.

Do not have to pay business income taxes, only individual income taxes.

Be your own boss.

Owner has unlimited liability.

Difficulty of raising capital.

May be too small and inefficient.

Limited managerial experience.

Difficulty in finding quality employees.

Limited life.


Non incorporated business jointly owned by two or more persons.

Easy to start, simple contract.

Ease of management.

No business income tax.

More easily attract capital.

Larger and more efficient.

Easier to attract top talent (Law, accounting)

Each partner is fully responsible for debt.

(In a limited partnership this is not the case)

Limited life.

Potential conflict.


Recognized by law (Charter) as a separate legal entity.

By being a separate legal entity a corporation can sue and be sued.

Ease in raising capital

Best management resources available.

Limited liability.

Unlimited life.

Ease in transfer of ownership.

Difficulty and expense of setting up a charter.

Owners and shareholders often have little say ion the running of the corporation

Detailed records must be kept.

Subject to many laws and regulations.

Double taxation. (Corporate and individual income taxes)


It should be noted that many of the small businesses you may think are sole proprietorships are actually corporations Today, any business with enough assets and risk typically incorporates. This way they limit individual risk.


The owners are liable or responsible for the debts of a company.

Unlimited liability means the owner may have to sell some or all of his personal possessions to help pay off the company's debts.

Limited liability means that the owner loses only the money he has put into the company and no more. He does not have to sell personal belongings.

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