Choosing of the structure of your business can be complicated.  There are so many financial, tax and legal considerations that the choice of an entity should be made with the assistance of a legal professional.  Too often, we find that clients have rushed prematurely into starting a business without first examining their business plans and objectives and without considering important tax and financial implications of their early business decisions. Business Structures Advantages and Disadvantages Sole Proprietorship Advantages of a Sole Proprietorship Easy and inexpensive to form: A sole proprietorship is the simplest and least expensive business structure to establish. Alternative business structures offer pros and cons, but many newer law firms are choosing this format for their practice. Advantages of partnerships Sole proprietors have relatively few formalities to adhere to and very little regulation from federal, state and local government. No doubt, you’ve heard of some of them but you’re probably feeling a little confused about what kind of structure you should register for your company and what the advantages of each type are. A big advantage of a sole proprietorship is the high level of autonomy the owner has to run his business. Selecting the wrong business model can have negative legal, structural, and operational implications for your business, so make sure you choose the structure most suitable for you. Advantages and Disadvantages of Different Business Structures. Instead, shareholders risk their equity. The four main business structures commonly used by small businesses in Australia are: 1. The disadvantage of using the flat organizational structure is that it can create role confusion within highly structured teams. There are so many financial, tax and legal considerations that the choice of an entity should be made with the assistance of a legal professional. The downside is double taxation. One of the first steps to take when starting a business involves choosing the structure of the company. Later, when the company distributes dividends to its shareholders, the shareholders must pay taxes on dividends received from the business at their personal income tax rates. The advantages and disadvantages of cooperatives show the need for peer support. Becoming aware of the advantages and disadvantages of a business partnership is a crucial first step if you're thinking of venturing into a … However, a major disadvantage of a sole proprietorship concerns the lack of liability protection for the business owner. Costs are minimal, with legal costs limited to obtaining the necessary license or permits. Salary-related expenses are reduced, enabling the company to save money as well as provide better pay for its workers.2. Company: a legal entity separate from its shareholders. Another advantage of a corporation is the company’s ability to raise capital by issuing stocks and bonds. Partners can share the responsibility of managing the company and share ideas with other partners. 2. The advantages of the corporation structure are as follows: Limited liability.The shareholders of a corporation are only liable up to the amount of their investments. If the partnership's business assets do not cover an obligation, a creditor may pursue a partner’s personal assets as compensation for the business debt. There is always the possibility of requesting S Corp status for your LLC. Looked at positively, the business partnership model enables you to go into business with someone else without the perceived formality of a limited company. What are the Advantages of a Corporation? Employment of outsourcing strategies along with contacting out specialized business functions. Advantages and Disadvantages of a Flattening Chart Jyoti. The shareholders are the owners of the business and the ones who put the capital into the business. A shareholder’s liability for company debts does not extend beyond his investment in the business. However, there are disadvantages to running your business through a company, particularly the associated costs and formalities and the lack of protection for your business’ assets. Business Structure Advantages and Disadvantages. The Basics of Business Structure Sole proprietorships, ... limited liability company (LLC), and corporation. Creation of interesting jobs for those who coordinate the entire … A partnership of two or more individuals has the ability to collaborate. Advantages and Disadvantages of Network Structures Potential advantages of network structures include: The development of lean and streamlined organizations. Need for peer support specialized business functions the Basics of business structure and... A reduction in overhead costs and an increase in operating efficiency of an LLC to allocate profits losses... 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