Types of Company Ownership

In: Business and Management

Submitted By naijaprincess223
Words 1106
Pages 5
Types of Company Ownership:

There are three types of company ownerships recognized in this country; they include proprietorship, partnership, and corporation. Depending on an individual’s personal need or ambition, one can successfully establish a business suitable to their preference.
Proprietorship:
Proprietorship is when an individual has a business that is unincorporated. The U.S Small Business Administration mentioned that there is no differentiation between a business established by an individual and that person. Therefore, the owner is permitted to acquire and retain all profits made by their business, but they are also responsible for the business’ liabilities, losses, and debts (SBA.org).
There are three advantages of being in a proprietorship: Ehrhardt and Brigham report, “(1) it is easily and inexpensively formed, (2) it is subject to few government regulations, and (3) its income is not subject to corporate taxation but is taxed as part of the proprietor’s personal income” (Pg. 5-6). Another advantage is that one has complete control over their business; they do not need to consult others for over decisions or any changes that need to be implemented. Even though there are benefits to having proprietorships, there are various limitations. First being the inability or difficulty owners of proprietorships encounter in the area of acquiring capital necessary for the expansion of the business. The second limitation is that “the proprietor has unlimited personal liability for the business’s debts, which can result in losses that exceed the money invested in the company (creditors may even be able to seize a proprietor’s house or other personal property)” (Pg. 6). The third limitation basically implies that the life span of the proprietorship last as long as its owners; therefore, if the owner of the business passes away, that company goes into…...

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