Types of Business Entity

Do you want to go solo on your business or you want to have a partner? There are many types of business entity defined in the legal system of various countries. Getting legal advice from your lawyer and tax consultant is recommended with regards to deciding which structure you want your business to be. They can help you decide which structure is best for your business. 

1. Single Proprietorship

Advantages – easy to put up; the owner makes all the decisions

Disadvantages – Too many things expected from the owner – time, attention, marketing

2. Partnership

Advantages – easy to put up; there’s a check and balance to partners involve preventing possible abuse

Disadvantages – Misunderstanding between partners can end the business; both partners needs to face business problems; decision making should come from all partners involved; the accountability of a shareholder is not limited to his shared capital

3. Corporation

Advantages – big opportunity to expand; the accountability of a shareholder is limited only to his/her capital (limited liability); professional management; strong and cannot be easily shut down

Disadvantages – difficult to put up; the influence of shareholders is limited from management

4. Cooperative

Advantages – limited liability; too many members; can seek professional manager

Disadvantages – all members are asked to participate in decision making which can be slow and longer.