28 Sep 2022


The Business Structure of a Company

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Academic level: College

Paper type: Coursework

Words: 373

Pages: 1

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According to Teece, (2009), one of the crucial decisions that an individual should make before starting a business is what structure it will take. The decision is based on the type and size of business, personal circumstances and the amount of capital and individual has in initiating and growing the business. However, one may decide to change the business structure as it grows and depending on the business environment.

The sole proprietorship business structure is one of the most common and simplest forms of business. It requires tiny paperwork and a fee paid when one is registering the business. After it is formed, an individual will own and manage the entire business including all its transactions. The owner of a sole proprietorship business has the power to pass it down to his/her next of kin without any form of setback. The owners of a sole proprietorship business being the sole owners do not have to split the profits. They have the ability to retain one hundred percent of the entire profits and use it at their discretion. Sole proprietorship business also has the upper hand when it comes to taxation. There is no filing of separate returns for the business. The income that is made from the business is accounted for as the personal income of the owner which is taxed according to their personal tax rates. This means that they will avoid the double taxation faced by most corporations. The owners of sole owners are also not required to file their annual income reports or other legal documents unlike other business structures (Galera and Borzaga, 2009).

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The main advantage of a corporate form of business is that it is a separate legal entity meaning one is not held liable in case of its debts. However, starting such a business is very expensive. Some of the expenses involved include paying the states where the business will operate from and other annual fees as required by law. Double taxation faces corporate businesses. This is seen whereby the corporation has to pay taxes when it gets profits and when paying the dividend to its shareholders. Corporations are required to maintain a lot of documentations in the form of annual reports and tax returns, corporate records, meeting records, licenses, and others. This documentation is also expensive for it will require people to become employed.


Galera, G. & Borzaga, C. (2009). Social enterprise: An international overview of its conceptual evolution and legal implementation. Social enterprise journal , 5 (3), 210-228.

Teece, D. J. (2010). Business models, business strategy and innovation. Long range planning , 43 (2), 172-194.

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StudyBounty. (2023, September 15). The Business Structure of a Company.


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