ALTERNATIVE AGRICULTURAL ENTERPRISES
PRODUCTION, MANAGEMENT & MARKETING
Cooperative Extension System ❚ Agricultural Experiment Station ❚ CIS 939
L. K. Fox
What is the best choice of type of ownership for your
business? As an entrepreneur, you must decide which
type of ownership is most appropriate. You should
consider factors such as start-up costs, the amount of
control you desire, the amount of personal risk you
are willing to assume, and your need for assistance in
business management. Table 1 summarizes the
advantages and disadvantages of four types of
business ownership — sole proprietorship, partner-
ship, incorporation, and cooperative. You must be the
one to decide which is best for you.
The most common form of business ownership is the
sole proprietorship, sometimes called the individual
proprietorship. This business is owned by one person.
It is usually operated by the owner, possibly with the
help of family members or a few employees. Sole
proprietorships can usually operate with very limited
The sole proprietorship is the least complicated form
of ownership and the easiest to enter and terminate.
Entry requires little more than a location, expertise in
the area of business considered, a source of capital,
the ability to make contacts, and the desire to start
your own business. Termination generally requires
paying your debts and closing your doors.
What does it mean legally?
As a sole proprietor, your liability is limited to your
own errors and obligations. But in case the business
fails, your personal assets — including home, auto-
mobile, and other properties — are subject to claim by
creditors. You can deal with the problem of unlimited
personal liability to a certain extent by purchasing
business liability insurance. However, as a sole
proprietor you would still be personally liable for any
business debts or loans because liability insurance
only protects against claims arising from a business-
As a so