Economics

In a country like the United States that is surrounded by several economic issues, the concept of running a business is very important. In order to consume and produce products there needs to be a business that manages everything. In order to have a business, there needs to be a form of business organization to see how it is going to be managed. There are three main forms of business organizations; a sole proprietorship, a partnership, and a corporation. Although they might be beneficial when having a business it has its advantages and disadvantages.

A sole proprietorship is a business owned and run by one person. Although it is the most profitable of all business organizations, this is the smallest in size. To form a proprietorship one would need a license and a fee. One advantage of a sole proprietorship is the ease of starting up. For example if someone has an idea to make a profit then he or she only has to decide to go and do it. One disadvantage is that it has unlimited liability. This means that the owner is personally responsible for all losses and debts of the business.

A partnership is a business owned by two or more persons. The most common form of partnership is a general partnership which is where all partners are responsible for the management and financial obligations of the business. Forming a partnership is much easier then a forming a sole proprietorship because more then one owner is involved. One advantage is the lack of special taxes on a partnership. Partnerships have to pay individual income taxes at the end of the year. One disadvantage is that each partner is fully responsible for the acts of all other partners. If one partner causes the firm to suffer a huge loss, each partner is fully and personally responsible for the loss.

A corporation is a form of business organization recognized by law as a separate legal entity having all the rights of an individual. Forming a corporation people must file for permission