Each person gets into business to make profits. This is the primary motive behind every business. But, the path one chooses to achieve this goal relies on the kind of associations you are looking to get into. When it comes to business, there are numerous categories of associations that one can form and these can be differentiated on the basis of the sort of ownership. Read on to discover more.
A sole proprietorship is among the most common forms of business setups. As the name implies, this kind of business setup is mostly run by a single individual. Such a company is mostly tiny in size and doesn’t retain more than 10 employees at a time.
Several benefits have been ascribed to a sole proprietorship organization. For a start, the choice making process is usually faster with a single person in control. Any managerial or organizational costs are also noticeably lower. On the other hand but the owner does need to handle ‘unlimited culpability ‘. In other words, the owner is the sole person responsible in case of any loss or crises suffered by the company. He / she may also have to melt assets to clear any accumulated debt. So, the owner would have to handle the strain of a business setback all by him / her.
Partnership is another sort of business organization. These are nearly similar to sole proprietorship. The only difference is that they have more than one owner. In partnership, there could be unlimited or limited partners. The unlimited partner has unlimited liability as regards the debts of the company. From the other perspective, the culpability of the limited partner is limited to their investment in the firm. Hence if one of the partners wants to make a journey to the town of Wichita’s, the other partners can guarantee smooth functioning of the business.