Final answer:
There are three common forms of business ownership: sole proprietorship, partnership, and corporation. Each has its own advantages and disadvantages. Sole proprietorship offers easy start-up and full control but comes with unlimited liability. Partnerships allow shared responsibilities and resources but can lead to conflicts. Corporations provide limited liability and easier access to capital but have complex requirements and double taxation.
Step-by-step explanation:
There are three common forms of business ownership: sole proprietorship, partnership, and corporation.
A sole proprietorship is a business owned and operated by one person. It is the easiest and most common form of business organization. Some advantages of a sole proprietorship include easy start-up, full control and decision-making power, and the ability to keep all the profits. However, one major disadvantage is that the owner has unlimited liability, meaning they are personally responsible for all debts and obligations of the business.
A partnership is a business owned by two or more people. General partnerships involve all partners sharing responsibility for the business, while limited partnerships have both general and limited partners, with limited partners having less responsibility and liability. Advantages of partnerships include shared responsibilities, shared financial resources, and easier access to loans. However, disadvantages include potential conflicts between partners and shared profits.
A corporation is a legal entity separate from its owners, known as shareholders. Advantages of a corporation include limited liability for shareholders, easier access to capital, and perpetual existence. However, disadvantages include complex legal requirements, double taxation on profits, and the separation of ownership and control.