The Advantages and Disadvantages of Various Types of Business Organization

Form of Business
Advantages
Disadvantages
Sole Proprietorship
  • Easy to Organize
  • Simple to Control
  • Offers freedom of operation.
  • Not subject to much government regulation

  • Difficult to acquire funds for expansion
  • Lacks Permanence
  • Subject to unlimited liability.
  • Makes owner perform all management functions
Partnership
  • Easy to organize.
  • Makes greater specialization of management possible
  • Pooling of funds
  • Little gov't regulation
  • Prone to disagreements by division of ownership
  • Ends automatically with death or withdrawal of one partner
  • Unlimited Liability
  • Limited financial resources
Corporation
  • Well capitalized
  • Limited liability
  • Stable and permanent
  • Permits specialization in management
  • Lots of gov't regulation
  • Heavy taxation and organization costs
  • Double taxation of income and dividends
  • Separates ownership from control
Return to Notes Page

This page was last modified Wednesday, January 29, 1997.