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Comparison Chart
The principal advantages and disadvantages of the three most commonly used business organizations are as follows:
 
Sole Proprietorship
Advantages
  • Low start-up costs

     
  • Greatest freedom from regulation

     
  • Direct control by owner

     
  • Minimum working capital requirements

     
  • Tax advantage to small owner

     
  • All profits to owner
     
 Disadvantages
  • Unlimited personal liability

     
  • Lack of continuity

     
  • More difficult to raise capital
Partnership
Advantages
  • Ease of formation

     
  • Low start-up costs

     
  • Additional sources of venture capital

     
  • Broader management

     
  • Limited outside regulation
     
 Disadvantages
  • Unlimited personal liability

     
  • Lack of continuity

     
  • Divided authority

     
  • Difficulty in raising additional capital

     
  • Hard to find suitable partners
Corporation
Advantages
  • Limited liability

     
  • Specialized management

     
  • Ownership is transferable

     
  • Continuous existence

     
  • Legal entity

     
  • Easier to raise capital

     
  • Unity of action account having
    centralized authority in board of directors


     
 Disadvantages
  • Closely regulated

     
  • Lack of continuity

     
  • Charter restrictions 

     
  • Extensive record-keeping necessary

     
  • Double taxation, except when organized as an "S Corporation" 

     
  • Difficult to liquidate investment
     

 
Limited Liability Company
Advantages
 
  • Limited liability

     
  • Flexible management structure and ownership

     
  • Continuous existence (NJ LLC's)

     
  • Legal entity

     
  • Easier to raise capital
 Disadvantages
 
  • More expensive to organize than a partnership or proprietorship

     
  • More regulations than a partnership or proprietorship

 

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