The Three Business Types
Well little girl...
What are the three types of businesses daddy?
The first is a sole proprietorship, they have complete control over their own business and its decisions. Some pros are it's easy to set up, there are tax benefits, and they are the boss. Some disadvantages are that the liability is on you, if the owner dies, the business is liquidated, and not many people put money in them.
Then there is a partnership. A partnership is a legal form of business operation between two or more individuals who share management and profits. Some advantages are that there are two heads, you will have greater borrowing capacity, and there is limited external regulation. Some disadvantages are that each partner is liable for the others debt unless stated, the two partners may disagree, and a partner may leave at any point.
Lastly, there is a corporation is a legal entity that is separate and distinct from its owners. Some advantages are corporations can sell shares, deduct the cost of benefits it provides to employees, and they can be exempt from capital gains tax and many other taxes. The disadvantages are that they require more money and time to start, government agencies monitor corporations, and there are many more legal requirements and papers to fill out.
So which one do you think you would start?
I am interested in the partnership. If we create one, we could run it together. We also would be able to borrow more money to get it started and there is limited regulations, which is always nice.
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