Forms of Business Ownership

Businesses such as consulting firms, manufacturing companies, and constructors, usually use, from a legal perspective, one of three basic forms of business ownership. 

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Small Business Association (SBA). 2003b. Forms of Business Ownership. Available at www.sba.gov/starting business/legal/fo rms.html. 

While the introduction presented here will certainly not prepare you for either of the stated applications, it could form the foundation on which you can gradually, by study and observation, build a superstructure of understanding how businesses are organized from a legal perspective. Recognize that variations exist on the three basic forms of form of business ownership. The following descriptions of the sole proprietorship, partnership, and corporation are based, in part, on Clough et al (2005), Halpin (2006), and Walesh (2000). 

From a legal perspective, businesses such as consulting firms, manufacturing companies, and constructors use one of three basic forms of business ownership the sole proprietorship, the partnership, and the corporation. As you move through your career in the private sector, when you are an employee, you may work for all three types of organizations. If you decide to start you own business, various business ownership avenues and scenarios are available. For example, you may begin as a sole proprietorship, then join with others in a partnership, and finally convert to a corporation. 

This exercise will help you, or you and others if a team exercise, think more deeply about the three forms of business ownership described in this chapter. Suggested tasks are ... 

A. Review the scenario described in Chapter 10, Exercise 10.2, Task A. Exercise 14.1 builds on that income statement exercise, the Chapter 10 finance exercise (Exercise 10.3), and the Chapter 11 legal form of business ownership exercise (Exercise 11.6) as part of the overall effort to develop a business plan for your new consulting business. The business plan will now be completed by preparing the marketing element. 

Business ownership opens up a wide range of opportunities that you would not have as an employee. You can form business relationships that can lead to new opportunities, including partnerships. When you meet with others, either natural foods store owners or just people who own their own businesses, you might find you have something that will satisfy someone else s need and they might have something for you. 

Business basics, such as legal forms of ownership, profit, income statements and balance sheets, decision or engineering economics, and marketing... 

B. Select a legal form of ownership for your new business and explain the rationale for the selection. 

Sole proprietorship This is the simplest ownership form because the business is owned by one individual. The sole proprietor owns all the assets, receives all profits, and is responsible for all aspects of the busi-... 

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