Types of Business Entities Advantages and Disadvantages

Document Type:Coursework

Subject Area:Business

Document 1

Partnerships and Sole Proprietorship benefit significantly from limited paperwork as requirements to form the business, unlike the limited liability companies. Partnerships enjoy tax benefits since the regime is based on individual partners rather than the entity since they are entitled to a share of the profits and loses based on a prescribed ratio (Ronan, 311). Nonetheless, sole proprietorships and partnerships have no greater capacity to raise capital, lack asset protection frameworks, separation of personal from business credit and culpable to consistent IRS audits from time to time. Business perpetuity is equally limited when it comes to partnerships and sole proprietors since the owners enjoy the exclusive knowledge of the operations. Limited liabilities companies, on the other hand, are regarded as legal entities enjoying significant protection from the law.

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