Different Forms of Business
Proprietorship
Proprietorship is the simplest form of business with a sole owner, such as a local grocery (Skripak, 2016). Such businesses are not incorporated; hence, do not have a separate legal entity. The advantages are that the owner has complete control and derives the maximum incentive from the business. The limitations are that the capital can be limited and that the owner bears all the risks (Skripak, 2016).
Partnership
A partnership is where two or more people agree to do business together, and they share both profits and liabilities, such as lawyers who start their law firm (Skripak, 2016). The advantage is that it is easier to raise capital by involving more people, and there is the likeliness of combining different skills possessed by the partners. The disadvantage is that the partners share losses and that any dispute that may arise may be problematic to the business (Skripak, 2016).
Corporation
A corporation is defined as a legal entity created by shareholders or individuals and enjoys most rights and responsibilities that are separate from the owners such as Apple Inc (Skripak, 2016). The advantage is that a corporation can raise a substantial amount of capital through the sale of shares, but the disadvantage is that there are excessive tax filings and double taxation (Skripak, 2016).
Limited Liability Company
This type of business is legally registered but limited by shares and has traits of both sole-proprietorship and a corporation such as Westinghouse (Skripak, 2016). The advantage is that the owners cannot lose more than they have invested, but the disadvantage is that it can be dissolved in case a member is declared bankrupt or is dies (Skripak, 2016).
Cooperative
Cooperative is an autonomous association of individuals with the main of providing both self-help and mutual help; hence, the primary focus is the provision of services to members. It is, therefore, owned by people who use its products and services (Skripak, 2016). An example of a cooperative is Navy Federal Credit Union, and the advantage is that it is easy to form and enjoys perpetual existence. The disadvantage is that it is characterized by a lack of secrecy and business acumen.
Joint Venture
This type of business involves two or more parties coming together to pool their resources with the primary goal of accomplishing a specific task. Still, every party keeps its legal status (Skripak, 2016). An example of a joint venture is that of Google and NASA that agreed to develop Google Earth. The advantage of a joint venture is access to better resources, but the disadvantage is that flexibility can be restricted.