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business entity that represents the best choice for each business

Discuss the various types of business entity forms.

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Major Traditional Business Forms:

Sole Proprietorships: A sole proprietorship also known as a sole trader, or simply proprietorship is a type of business entity which is owned and run by one individual and where there is no legal distinction between the owner and the business. All profits and all losses accrue to the owner (subject to taxation). All assets of the business are owned by the proprietor and all debts of the business are their debts and they must pay them from their personal resources. This means that the owner has unlimited liability. It is a "sole" proprietorship in the sense that the owner has no partners (partnership).

A sole proprietor may do business with a trade name other than his or her legal name. This also allows the proprietor to open a business account with banking institutions.

General Partnership: In the commercial and legal parlance of most countries, a general partnership or simply a partnership refers to an association of persons or an unincorporated company with the following major features:

 Created by agreement, proof of existence and estoppel.
 Formed by two or more persons
 The owners are all personally liable for any legal actions and debts the company may face
It is a partnership in which partners share equally in both responsibility and liability

Limited Partnerships: A limited partnership is a form of partnership similar to a general partnership, except that in addition to one or more general partners (GPs), there are one or more limited partners (LPs). It is a partnership in which only one partner is required to be a general partner.[1]

The GPs are, in all major respects, in the same legal position as partners in a conventional firm, i.e. they have management control, share the right to use partnership property, share the profits of the firm in predefined proportions, and have joint and several liabilities for the debts of the partnership.

As in a general partnership, the GPs have actual authority as agents of the firm to ...

Solution Summary

The business entity that represents the best choice for each business.