Advantages and disadvantages of different types of Business Ownership

Question 1

Sole Proprietorship: Advantages

Answer 1

• Easy to set up
• Personal incentive:
  keep all the profits
  Make key decisions
  high degree of control

Question 1

Sole Proprietorship: Disadvantages

Answer 1

• Unlimited Liability – Owner is personally responsible for the debt incurred by the business
• Limited access to capital (money)

Question 2

Partnership: Advantages

Answer 2

• Greater access to capital
• Shared responsibility

Question 3

Partnership: Disadvantages

Answer 3

• Unlimited Liability – the partners are personally responsible for the debt incurred by the business
• Potential for conflict

Question 4

Corporation: Advantages

Answer 4

• Easy to raise funds
• Limited liability - No member of the corporation can be held personally liable for the debts, obligations, or acts of the company.

Question 5

Corporation: Disadvantages

Answer 5

• The costs of creating and maintaining the corporation can be very high.
• Laws governing corporations are more complex.