Explain why you would chose between a sole proprietor, partnership, or company structure

(use the information below to help you which includes the Advantages and disadvantages)

Reference: BSBCNV 503 Analyse and Interpret Legal Requirements for a Transaction Student

Advantages and disadvantages are already listed by an tutor:

Sole proprietor

Advantages

• The sole proprietor has full control
• Easy decision making
• Selling or transferring business is determined by the sole proprietor
• No corporate tax
• Less legal costs
• Fewer formal requirements

Disadvantages

• Losses are suffered by one person
• Raising of capital is made by the sole proprietor
• Relying on loans to finance operations

Partnership

Advantages

• Easy to raise capital
• They have flexibility of responsibilities
• Shared responsibility
• Shared decisions making

Disadvantages

• Disagreements
• Shared liability based on capital structure
• Corporate taxation
• Sharing of profits

Company

Advantages

• Limited liability to sareholders
• Easy transfer of shares or ownership
• Expanded trade regions
• Access to a wider capital base

Disadvantages

• Expensive to establish
• Complex reporting requiements
• Tax is charged to shared profits to shareholders