Business Entity Types
Pro’s & Con’s
Starting a new business requires making many decisions. A business owner is, by default, a decision-maker.
Fortunately, resources at the local, state and federal levels abound to assist you with decisions related to
starting and running your business. For additional information and forms, utilize our Interactive Business CD
that serves as a comprehensive guide and offers links to various local and federal resources available.
Decision: Business Organization
Once you know the type of business you wish to operate, you will need to decide on its organization. Will it
be a sole proprietorship, a partnership, a corporation, or a limited liability corporation? The following
information will guide you as to the pros and cons of each type of business entities allowing you to
determine the best avenue to suite your business needs.
Forming a sole proprietorship is the easiest way to start a business. In most cases, the only step required is
to complete a fictitious name form at the Clerk of the Court. This form is generally required to open a
business checking account with most local banks, This process can be completed quickly and for a minimal
cost in addition to requesting their assistance in conducting a search of your company’s name to insure no
other companies are operating with the same name in your jurisdiction.
Sole Proprietorship Pros and Cons
Pros. The biggest advantages to a sole proprietorship are:
1) It is an easy way to start your business;
2) It is an inexpensive way to start your business.
Con. The biggest disadvantage to a sole proprietorship is:
The business owner (YOU) is personally liable for the business. This means that if a disgruntled customer
sued you, you could potentially lose your personal belongings, like your house.
A business partnership is created when two or more persons agree, in person or in writing, to start a
business. The two main types of partnerships are: General and Limited.