Business Law

Sole proprietorships are the most common form of business organization with good reason. There are no formal requirements to start a sole proprietorship. What other advantages are there to starting a business as a sole proprietorship? Note also the disadvantages that go with a sole proprietorship. The link in the textbox “Hyperlink: Small Businesses Squeezed as Banks Limit Lending” will give you insight into the challenges of borrowing money as a sole proprietor. Be sure you understand the issue of liability in sole proprietorships, as this will provide a foundation for discussions of limited liability forms of organizations in the following Credit Units.

Please read The Legal and Ethical Environment of Business: “Chapter 11: Section 1: Sole Proprietorships” (Links to an external site.)Links to an external site. (PDF)

For various reasons, individuals may decide that it is better to run a company with others than on their own. These individuals may decide to organize as a partnership in order to draw on the experience and expertise of others. Be aware that there are several forms of business partnerships as discussed in the following Credit Units.

Please read The Legal and Ethical Environment of Business: “Chapter 11: Section 2: Partnerships” (Links to an external site.)Links to an external site. (PDF)

Be aware of the reasons that the corporate structure is very attractive to businesses, particularly large and growing companies. 

Please read The Legal and Ethical Environment of Business: “Chapter 11: Section 3: Corporations”  (Links to an external site.)Links to an external site.(PDF)

Limited liability companies (LLCs) are a relatively new form of business organization in the United States, but they have already been widely adopted, particularly by small businesses. With the many formalities and structural requirements required of corporations, LLCs offer a simpler alternative that is more suited to small businesses. Note, in particular, the similarities and differences of LLCs versus sole proprietorships and corporations. Why does the text refer to LLCs as a “hybrid form of business organization”? Be sure to familiarize yourself with the requirements needed to form and organize an LLC. 

Note the discussion of limited liability partnerships (LLPs) in the last paragraph of this section. LLPs are organizations that provide limited liability and tax advantages to professional partnerships, such as law firms and accounting firms.

Please read The Legal and Ethical Environment of Business: “Chapter 11: Section 4: Limited Liability Entities” (Links to an external site.)Links to an external site. (PDF)