Disadvantages Of Business Entity

Business Entities

During the start-up of any business there are decisions that the owners must make to determine the type of business entity that they are interested in forming. A business entity is an “Organization established as a separate existence for the purposes of taxes.” (“What is business entity? Definition and meaning,” 2016). In order to make an informed choice about a few things that will pay a huge part in your entity. Business owners have to take into consideration the market niche, in some areas corporate nimbyism. Nimbyism is “not in my backyard” mentality that has derailed a lot of projects. The four major types of business entities are sole proprietorship, partnership, corporation, and limited liability company.

Sole Proprietorship

Partnerships in general are easier to create, but there has to be a consensus between all partners in the form of a written agreement. At a minimum they all have to decide financing, who will do the work, not to be morbid, but the questions have to be asked about what if a named partner dies. Cold but it is a reality that many partnerships face. One disadvantage of a partnership is the decision making, unlike the sole proprietor, a partner has to obtain consensus from all named parties. You will have to become very

(Dictionary, n.d.) My experience with an LLC was through partnership with a non-profit homeless veteran’s program. In the beginning we had the developer who owns the LLC and all he wanted was to create low cost housing units to house homeless military veterans and the non-profit just wanted to provide the supportive and ancillary services. Both entities worked well together over 10-15 years when the government says this is a “less than arms-length relationship’. The implications were that the LLC would benefit greatly from contracts and grants obtained for the non-profit because they were not put out to bid. This was a pain staking audit which resulted in the dissolution of the partnership. They said that although they didn’t see anything too far out of the scope the repercussions were not as devastating as we all feared. Some of the advantages of this partnership was knowing that if the outreach team came back with 5 homeless veterans the service provider and the housing provider would never send a veteran out in the