The sole proprietorship business is owned by a single individual, who can be held liable for any debts the company incurs. This type of business is easy to set up and offers flexibility because the owner has control of the decisions. One major disadvantage is that the business owner must personally bear any losses.
In many respects, a partnership is like a sole proprietorship. However, it involves more than one person sharing the ownership and responsibility of the business. The owners can pool their skills and resources to maximize the chances of success. They are also protected in case something goes wrong, as personal assets cannot legally be used to pay off any outstanding debt. The downside is that partners may disagree on decisions, which could lead to conflict.
Lastly, a limited company is an independent legal entity where shareholders’ liabilities are limited only to amount they have invested into it. The owners are protected as they cannot lose their wealth if the company itself is in trouble.
The three types of business structures offer different benefits depending on what each individual entrepreneur wants to accomplish. Therefore, it is crucial that you choose the right form in order for your desired outcome to be achieved.
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