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Forms of Business Organization


A Sole Proprietorship, or just Proprietorship, is an unincorporated business owned by one individual. The owner and the business are one in the same, even when the business is operated under a different name. In a Sole Proprietorship all profits, losses, assets, and liabilities are the direct and sole responsibility of the owner. If the owner dies, the business dies with him.


A partnership is an unincorporated business by two or more persons. Like proprietorships the law does not distinguish between the business and its owners. By default a partnership will terminate upon death, disability or withdrawal of any partner.


A corporation is a legal entity created by a state. It is separate and distinct from its owners and has unlimited life. It provides limited liability to shareholders (the owners), who can lose only what they have invested.