Question

For this milestone, you will discuss Case Study Three. Identify the main types of business entities, and discuss the advantages and disadvantages of each. Your active participation in this discussion is essential to improving your understanding of the advantages and disadvantages of the various business entities. Actively engaging with your peers will help you complete the remaining critical elements for the final project.

Answer 1

Sole proprietorship:

Advantage: is very easy to establish, and gives total control to the owner.

Disadvantage: the sole owner is personally liable in case of bankruptcy.

Partnership:

Advantage: involve two or more people, meaning that capital is likely to be higher. Gives tax benefits to partners.

Disadvantage: partners are also personally liable in case of bankruptcy.

Corporation:

Advantage: a corporation is legally, a separate entity from its stockholders, meaning that stockholders are not personally liable in case of bankruptcy. Corporations can also grow to include a large number of people (stockholders).

Disadvantage: they are more difficult to start than other types of business entities, and are more closely inspected.

Limited Liability Company:

Advantage: they combine the pass-through characteristics of partnerships with the limited liability of corporations.

Disadvantage: they are not necessarily as profitable as corporations.