A business is a group of people who work together to achieve a common goal. People work in a business to create and sell goods and services. Sole proprietorship, partnership, and corporation are the three primary types of enterprises.
The following are the benefits and drawbacks of various business structures:
1. The Sole Proprietorship:
A sole proprietorship is a company run and owned by a single individual.
Advantages:
- Complete control over the business's operations and a cheap start-up cost.
- There is no need for public disclosures or separate tax reporting.
Disadvantages:
- Complete accountability for liabilities.
- Because of the modest size of the company, raising financing can be problematic.
2. Collaboration or Partnership:
When two or more people agree to split a company's profits and losses, they create a partnership.
Advantages
- It's simple to get started.
- Workload distribution and expertise.
Disadvantages
- Conflicts are possible.
- All debts accrued are liable.
3. Corporation:
A corporation is a legal term for a group of individuals or enterprises that are treated as a single legal entity.
Advantages
- Fundraising is simple, and responsibility is limited.
- Various tax exemptionsÂ
Disadvantages
- Because a company is a different legal entity, taxation must be done twice.
- Managers are more involved than owners.
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