Simplest business entity Easiest and least expensive form of business to establish. Maximum degree of freedom from government regulation. Proprietor owns and operates the business. Provides the capital and furnishes all necessary equipment and property.
Owner can make all decisions unilaterally.
All business transactions are made in the owner's name, including contracts. No legal formalities barring termination of the business Possible tax savings Disadvantages of proprietorship Unlimited liability - extends to personal assets that are not involved in the operation of the business Owner must accept all burdens and responsibilities of management. No continuity of business in the event of the owner's death Credit and capital - The size of the business is limited by the amount of the owner's personal funds, unless a backer can be found. Taxes - The owner must pay income taxes at normal individual rates on the full earnings of the business whether or not the profits are withdrawn. Two or more persons as co-owners organized to make a profit The general partnership is recognized as a separate legal entity for purposes such as owning property, having employees, and suing or being sued.