{"id":4802,"date":"2016-04-04T10:47:45","date_gmt":"2016-04-04T15:47:45","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/incorporation-and-legal-structures\/business-form-and-management-of-the-business-pros-and-cons.html"},"modified":"2025-10-30T16:26:00","modified_gmt":"2025-10-30T21:26:00","slug":"business-form-and-management-of-the-business-pros-and-cons","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/incorporation-and-legal-structures\/business-form-and-management-of-the-business-pros-and-cons.html","title":{"rendered":"Business Form and Management of the Business: Pros and Cons"},"content":{"rendered":"\n
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Business Form and Management of the Business: Pros and Cons<\/h1>\n\n
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\n By FindLaw Staff<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
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Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n <\/div>\n \n

\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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Key Takeaways<\/h2>\n

When evaluating different <\/span>business<\/span> structures<\/span> for your company, you should understand the required formalities, the tax implications, and the level of limited liability protection<\/span> each offers.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n\n

Starting a small business<\/span> is an exciting venture. But, it comes with important decisions, like choosing the right business structure<\/span>. This choice affects everything from how you file tax returns to how you manage your business. There are several key types of <\/span>business<\/span> structures<\/span>: sole proprietorships<\/span><\/a>, general and limited <\/span>partnerships<\/span><\/a>, C corporations<\/a>, and limited liability companies<\/span><\/a> (LLCs).<\/p>\n

Understanding these common <\/span>business structures<\/span> can help lay the foundation for your business\u2019s success. This article will introduce key considerations when choosing your business entity<\/span>. First, we discuss the general pros and cons of each business structure<\/span>. Then, we compare the different <\/span>business<\/span> structures<\/span> based on legal protections<\/span>, expenses, taxes, funding, and other factors.\u00a0<\/p>\n

Need help with business formation? Our trusted partner LegalZoom makes it easy\u2014packages start at $0 + state filing fees.<\/a><\/b><\/em><\/p>\n

Pros and Cons of Common Business Formations<\/h2>\n

Below, we introduce the basics of each type of organizational structure<\/span> and some of their pros and cons. \u00a0<\/p>\n

Sole Proprietorship<\/span><\/h3>\n

In a sole proprietorship<\/span><\/a>, the owner usually manages all aspects of the business. Legally, there\u2019s no distinction between the business and its owner. They\u2019re easy to set up, but there are some drawbacks.<\/p>\n\n\n\n\n
\u00a0Pros<\/b><\/td>\n\n

\u00a0Cons<\/b><\/p>\n<\/td>\n<\/tr>\n

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  • The sole proprietor has complete autonomy in running the business<\/li>\n
  • Low startup costs and simple procedures<\/li>\n
  • Tax deductions for business expenses<\/li>\n<\/ul>\n<\/td>\n
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