The principal advantages and disadvantages of the four 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   Return to Business Basics & Types