Academic Master

Human Resource And Management

Types of Ownerships

Sole Ownership

Insole ownership, an individual, has the complete control over his or her business. He or she is authorized to take all important decisions that are related to activities of the company. Therefore, in this type of ownership, individual will get all the income for the business. Though the sole partnership are comprised of a large number of employees, it can also be started at small scale. It is believed that sole ownership is the simplest form of the business owner and it is easiest to start as compared to other types of ownership.

Characteristics of Sole Ownership

In this type of business ownership, the profits are taxed at the marginal tax rate of the sole proprietor. The rate can be lower as compared to a tax rate of the limited or corporate company. Due to this, it is important for sole proprietors to show their specific financial information for the business on the tax returns of their income. Furthermore, it is also important to make a tax payment to the government. Also, losses in business may be balanced against the income of the other proprietor (Johnson, & Greening, 2009).

A sole proprietor has complete freedom to make decisions about the operation of the Firm without waiting or asking for anyone’s approval. A sole proprietor can change the timings of the store, moves the location and other decisions. All profits of the company or institutions are the personal earnings of the owner. Therefore, the owner has a strong will to get success. It is also believed that sole proprietor also gets proud of his achievements and he or she needs to be. On the other hand, if the business fall, the sole proprietors is one who is responsible for that failure.

Furthermore, unlimited liability is a legal concept is a concept according to which an owner of the business is particularly responsible for all types of debts. Legally, there is no difference between business debts and debts of the proprietor. Lack of continuity is another characteristic of the sole proprietor. If the owner dies, retires or become legally incompetent, then business starts to cease (Johnson, & Greening, 2009).


It is a business that is owned by two or more than two peoples. Most of the partnership owned businesses are small, while some quite big. It is believed that establishing a partnership business is more difficult as compared to the sole partnership. However, it is inexpensive and easy. The cost of this type of business varies according to the complexity and size. It can be possible to establish the simple partnership without taking the help of an accountant and lawyer. Although, it is always good to get professional advice.

Characteristics of Partnership Ownership

In this type of ownership, more capital is available as compared to the sole partnerships because pool the funds. The additional capital along with more partners can motivate banker to extend the larger loan and their support in favor of business.

It is necessary for all business partners to prepare an agreement of partnership. It must contain all provisions related to the control of management affairs, disputes regarding policies and sharing of profit. Therefore, it is recommended by many experts that lawyer should be appointed to prepare an agreement.

Insole partnership, all profits go to the single owner, while in partnership financial rewards are shared among all partners which motivate them to perform well. Though, partnership pays no income taxes. It is expected from them by the internal revenue services to file a yearly information returns that include names of all partners along with their addresses. The return should all also contain the information about the distributions, expenses, and income of all partners that are involved in the business. Eventually, the share of each partner of the profit in the same way as the sole owner is taxed (Cooper, & Dunkelberg, 2006).

In this type of ownership, the weakness of one partner is masked by the strength of another partner. Besides this, sharing of decisions and taking consent from each other will relieve the pressure from one individual. Most of the individuals feel resistant to enter into the partnership because it has unlimited liability. There are several types of businesses that permit owners to limit the liability. Several laws are there that allow the owners to establish a “limited partnership.” It has two types that include a single general partner who is accountable for all the liabilities faced by the company and who runs the whole business. Limited partners who have limited involvement in the business, there loses are limited to the amount of money that they had invested in the business.

Legally, the partnership will be ended if any of the partners dies or business becomes bankrupted unless the agreement has some provisions related to it. Moreover, the transfer of an interest in the business to new or existing partners is carried out according to the agreement of partnerships or any other agreement related to that provision which is signed by all partners. In a real setting, there is a small space for the transfer of an interest of a partnership to a public investor (Cooper, & Dunkelberg, 2006).

My Opinion

I believe that partnership is better as compared to the sole ownership. Firstly, it brings individuals from different background who share the responsibility to run the business. Besides this, it also makes the financing easier. The business can draw on some individuals and financial resources. The business partners cannot only contribute funds to the business, but they can secure the Bank loan by using their resources. Lastly, in this type continuity is not an issue because partners can agree legally to permit the partnership to continue, even if one or more than one partners die or face other problems.


Cooper, A. C., & Dunkelberg, W. C. (2006). Entrepreneurship and paths to business ownership. Strategic management journal7(1), 53-68

Johnson, R. A., & Greening, D. W. (2009). The effects of corporate governance and institutional ownership types on corporate social performance. Academy of management journal42(5), 564-576.



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