HERMWIL RODIN D.
ROBINOS
SOLE
PROPRIETORSHIP
 The simplest and most 
common form of business
ownership, sole
proprietorship is a business
Description
owned and run by someone
for their own benefit. The
business’ existence is
entirely dependent on the
owner’s decisions, so when
the owner dies, so does the
business.
 All profits are subject to the
Advantages
owner
 There is very little regulation
for proprietorships
 Owners have total flexibility
when running the business
 Very few requirements for
starting—often only
business license.
 Owner is 100% liable for
Disadvantages
business debts
 Equity is limited to the
owner’s personal resources
 Ownership of proprietorship
is difficult to transfer
 No distinction between
personal and business
income
Grade 12 Mabini
4 Major Forms of Business Organizations
LIMITED
PARTNERSHIP CORPORATION LIABILITY
COMPANY (LLC)
These come in two types: general and limited. In general  Corporations are, for tax  Similar to a limited
partnerships, both owners invest their money, property, labor, purposes, separate entities partnership, an LLC
etc. to the business and are both 100% liable for business and are considered a legal provides owners with
debts. In other words, even if you invest a little into a general person. This means, among limited liability while
partnership, you are still potentially responsible for all its other things, that the profits providing some of the
debt. General partnerships do not require a formal generated by a corporation income advantages of a
agreement—partnerships can be verbal or even implied are taxed as the “personal partnership. Essentially,
between the two business owners. Limited partnerships income” of the company. the advantages of
require a formal agreement between the partners. They must Then, any income partnerships and
also file a certificate of partnership with the state. distributed to the corporations are
 Limited partnerships allow partners to limit their own liability shareholders as dividends combined in an LLC,
for business debts according to their portion of ownership or or profits are taxed again as mitigating some of the
investment. the personal income of the disadvantages of each.
owners.
 Shared resources provides more capital for the business  Limits liability of the owner  Limits liability to the

Each partner shares the total profits of the company to debts or losses company owners for
 Similar flexibility and simple design of a proprietorship  Profits and losses belong to debts or losses
 Inexpensive to establish a business partnership, formal or the corporation  The profits of the LLC
informal  Can be transferred to new are shared by the
owners fairly easily owners without double-
 Personal assets cannot be taxation.
a seized to pay for business
debts
 Each partner is 100% responsible for debts and losses  Corporate operations are  Ownership is limited by
 Selling the business is difficult—requires finding new partner costly certain state laws
 Partnership ends when any partner decides to end it  Establishing a corporation is  Agreements must be
costly comprehensive and
 Start a corporate business complex
requires complex  Beginning an LLC has
paperwork high costs due to legal
 With some exceptions, and filing fees.
corporate income is taxed
twice