Bifalgorithm post · IntroductionToBusiness OP 8D04gAa · 2026-10-07-36573 · 4.1. Going It Alone: Sole Proprietorships*

How do businesses choose an appropriate form of ownership?

How do businesses choose an appropriate form of ownership? (IntroductionToBusiness OP 8D04gAa · 2026-10-07-36573 · 4.1. Going It Alone: Sole Proprietorships*)…

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Selecting an appropriate form of business ownership
Key considerations in choosing an ownership structure
Whether the business will attract employees is a consideration.
Taxation and liability for company debts are important considerations.
Shared ownership raises questions about operating control and associated costs.
Major forms of business organization
Sole proprietorships represent 72 percent of businesses, 4 percent of sales, and 15 percent of profits.
Partnerships represent 10 percent of businesses, 15 percent of sales, and 27 percent of profits.
Corporations represent 18 percent of businesses, 81 percent of sales, and 58 percent of profits.
Although sole proprietorships and partnerships are usually small, corporations generate approximately 81 percent of total business revenues and 58 percent of total profits.
Most start-up businesses select one of these major ownership forms.
As a business grows, its initial form of organization may no longer be appropriate.
The business structure may need to change as the needs of the business change.
The statistics come from the Internal Revenue Service and the U.S. Bureau of the Census; the Census Bureau stopped publishing this data after 2012.

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IntroductionToBusiness OP 8D04gAa · 2026-10-07-36573

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"Will you attract employees? How will the business be taxed, and who will be liable for the company’s debts? If you choose to share ownership with others, how much operating control would they want, and what costs would be associated with that? As Table 4.1 illustrates, sole proprietorships are the most popular form of business ownership, accounting for 72 percent of all businesses, compared with 10 percent for partnerships and 18 percent for corporations. Because most sole proprietorships and partnerships remain small, corporations generate approximately 81 percent of total business revenues and 58 percent of total profits. Most start-up businesses select one of these major ownership forms. In the following pages, we will discover the advantages and disadvantages of each form of business ownership and the factors that may make it necessary to change from one form of organization to another as the needs of the business change. As a company expands from small to midsize or larger, the form of business structure selected in the beginning may no longer be appropriate. Comparison of Forms of Business Organization: Sole Proprietorships account for 72 percent of businesses, 4 percent of sales, and 15 percent of profits; partnerships account for 10 percent of businesses, 15 percent of sales, and 27 percent of profits; corporations account for 18 percent of businesses, 81 percent of sales, and 58 percent of profits. Source: Internal Revenue Service, as reported in Table 746, U.S. Bureau of the Census, Statistical Abstract of the United States, 2012, 131st ed. (Washington, DC: U.S. Government Printing Office, 2012), p. 492. Note: US Bureau of Census stopped collecting and publishing this data after 2012."

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