Types of business organizations

Sole Proprietorship Note:

This is a business that is owned by only one person.
Characteristics
● Earns all the profit and absorbs all the losses.
● Investments make up the capital
● There is unlimited liability
● No continuity of the business in cases such as
death, insanity, or bankruptcy.
Advantages
● Low start-up cost
● Easy tax reporting
● Total control of business
Disadvantages
● Lack of structure
● Unlimited liability
● Difficulty raising funds
Partnership
This is a business that is owned by partners. The partners
are governed by the partnership agreement signed by all
partners. Partnership Agreement defines the initial
contributions that are expected of the partners.
Characteristics
● The capital is contributed by all partners
● There are at least 2, up to a maximum of 20
partners
● The profits are shared and losses are borne by all
partners
● There is unlimited liability except for partner(s)
with limited liability.
● The business will discontinue when one partner
dies, becomes insane, or is declared bankrupt.
Advantages
● Easy to establish
● Workload is distributed
● Expertise is combined
Limited Liability
Limited liability companies are defined as a type of
business structure where owners of the LLC are called
“members” and are partners in a business entity with all
the protection of a corporation plus the ability to pass
through any business profits and losses to their personal
Limited liability is {a form of legal protection for
shareholders and owners that prevents individuals from
being held personally responsible for their company's
debts or financial losses.}
Unlimited Liability
Unlimited liability refers to the full legal responsibility
that business owners and partners assume for all
business debts. 
Unlimited liability typically exists in general
partnerships and sole proprietorships. It provides that
each business owner is equally responsible for whatever
debt accrued within a business if the company is unable
to repay or defaults on its debt. An owner's personal
wealth can be seized to cover the balance owed.
An Example of Unlimited Liability
Consider four individuals who are working as partners.
Each invests $35,000 into the new business that they
own jointly. The company accrues $225,000 in liabilities
over one year. All four partners are equally liable for
repayment of the $225,000 if the company can't repay
and/or defaults on these debts. The owners would be
required to come up with $56,250 each to alleviate the
$225,000 in debt, in addition to their initial investment
of $35,000.

Disadvantages
● Full liability
● Possibility for disagreement
● Transferring ownership is difficult