Types of Ownership of Company

SOLE PROPRIETORSHIP

A sole proprietorship is a type of business entity which legally has no separate existence from its owner. Hence, the limitations of liability enjoyed by a corporation and limited liability partnerships do not apply to sole proprietors. All debts of the business are debts of the owner. It is a "sole" proprietorship in the sense that the owner has no partners. A sole proprietorship is not a corporation; it does not pay corporate taxes, but rather the person who organized the business pays personal income taxes on the profits made, making accounting much simpler. A sole proprietorship does not have to be concerned with double taxation, as a corporate entity would have to.

A sole proprietor may do business with a trade name other than his or her legal name. In some jurisdictions, for example the United States, the sole proprietor is required to register the trade name or "Doing Business As" with a government agency. This also allows the proprietor to open a business account with banking institutions.

Advantages of Sole Proprietorship

An entrepreneur may opt for the sole proprietorship legal structure because no additional work must be done to start the business. In most cases, there are no legal formalities to forming or dissolving a business. A sole proprietor is not separate from the individual; what the business makes, so does the individual. At the same time, all of the individual's non-protected assets (e.g homestead or qualified retirement accounts) are at risk. There is not necessarily better control or business administration possible with a sole proprietorship, only increased risks. For example, a single member corporation or limited company still only has one owner, who can make decisions quickly without having to consult others.

Furthermore, in most jurisdictions, a sole proprietorship files simpler tax returns to report its business activity. Typically a sole proprietorship reports its income and deductions on the individual's personal tax return. In comparison, an identical small business operating as a corporation or partnership would be required to prepare and submit a separate tax return. A sole proprietorship often has the advantage of the least government regulation.

Disadvantages of Sole Proprietorship

A business organized as a sole trader will likely have a hard time raising capital since shares of the business cannot be sold, and there is a smaller sense of legitimacy relative to a business organized as a corporation or limited liability company. It can also sometimes be more difficult to raise bank finance, as sole proprietorships cannot grant a floating charge which in many jurisdictions is required for bank financing. Hiring employees may also be difficult. This form of business will have unlimited liability, so that if the business is sued, the proprietor is personally liable. The life span of the business is also uncertain. As soon as the owner decides not to have the business anymore, or the owner dies, the business ceases to exist.

Another disadvantage of a sole proprietorship is that as a business becomes successful, the risks accompanying the business tend to grow. To minimize those risks, a sole proprietor has the option of forming a corporation.

PARTNERSHIP

A partnership occurs when you decide to pool capital and work together with at least one more person. In this form of business, you and your partners are joint-owners of the business and therefore will share the business profits and risks.

Advantages of Partnership

• more expertise and more resources for capital.
• business risks can be distributed and shared among partners.

Limitations of Partnership

• All partners carry the same responsibilities. This means that you are liable for risks and debts of the business even if it is caused by the actions of your partners. With unlimited liability, each partner is also liable to use their private resources to meet the partnership's debts.
• Disagreements and disputes may occur among partners and this may disrupt business plans or operational efficiency.
• A Partnership’s lifespan is limited – it may end if any one of the partners has mental disorder, falls bankrupt, resigns or dies.

PUBLIC COMPANY

Definition
- A public company usually refers to a company that is permitted to offer its registered finance (stock, bond, etc) for sale to the general public, typically through a stock exchange.
-Usually, the finance (securities) of a public company are owned by many investors while the shares of a private company are relatively few shareholders

Advantages
- Able to raise funds and capital through the sale of its securities.
- May issue their securities as compensation for those that provide services to company, such as their directors, officers, and employees

Disadvantages
- Required to public financial information that could be useful to competitors