Final answer:
Sole proprietorships offer full control and profits to the owner but come with unlimited liability. Partnerships allow for shared control but also share unlimited liability. Corporations provide limited liability to owners, exist as separate legal entities, and can raise capital through selling shares.
Step-by-step explanation:
Comparing Sole Proprietorships, Partnerships, and Corporations
To compare and contrast the three main forms of business organizations, we look at sole proprietorships, partnerships, and corporations. Each has distinct features and implications for liability.
Sole proprietorships are businesses owned and operated by one individual. They are the most straightforward to establish and offer complete managerial control to the owner. However, they also come with unlimited liability, meaning the owner is personally responsible for all debts and legal obligations of the business.
Partnerships involve two or more individuals who share ownership and management responsibilities. While they allow for shared decision-making and resources, partners in a general partnership also share unlimited personal liability for the business's debts and legal issues.
Corporations are more complex structures that exist as independent legal entities, separate from their owners. Shareholders own the corporation, but their liability is typically limited to the amount they invest in the company. Corporations can raise capital by selling shares, but they face more regulatory requirements and taxation complexities.
The type of business with the least amount of liability for the owner is the corporation, as shareholders are only held accountable to the extent of their investment, and personal assets are usually not at risk.