There are many types of business. The three most basic is,
- Sole proprietor
- Partnership
- Corporation
All the others branch off of these. Every one of them has its pros and cons. So really none of them are better than one another. Each of them works better in a certain situation. For example, the sole proprietor is the cheapest to start. But the partnership and the corporation shared blame if sued.
Sole proprietor is the cheapest and easiest business to start. You have all the power and nobody can tell you what to do. Inside the legal system of course. Another bonus is that of the all profit is given to you to either reinvest or keep. Unfortunately a con is that if you die or can’t work for whatever reason the business dies. And you are 100% liable. Meaning if you have a restaurant and someone gets food poisoning: If they sue you, you pay all of the money they sue you for. And you’re going to have a problem attracting qualified employees.
Partnerships are I think are the most fun if you have a cool partner. You can have as many partners as you like and every one usually has equal rank in a partnership. You should have a plan to see how it is going to be organized. Like who is going to be in charge of what. Organization is essential in a partnership. A pro is that receiving funds is probably a lot easier with two or more. You’ll probably attract employees with the option of becoming a partner. And if you have complementary skills (Ex. author and an editor) you’ll have more than likely a better business. A bad thing is that you have someone in equal authority and you should consult at every decision. If you don’t you could have a fight. You also need to be aware that if you fight and break up your business will more than likely die. So be careful. And you are jointly and personally responsible for your partners’ actions.
Corporations are the most complicated I think. This is where stocks come in as well as corporate takeovers. Usually you have a company that is around for a while in then you switch all of your company’s banking info and EIN. And the company is no longer yours it’s the stock holders. Fortunately the liability is split and not all together your. Also you can get your assets protected, but this is not entirely true some companies require a personal guarantee. And whoever has the highest percent of stock owns the company. And this is a very costly operation. And sometimes not worth it.