Legal Forms of Business Advantages and Disadvantages Sole Proprietorship Advantages Low start-up costs Greatest freedom from regulation Owner in direct control Minimal working capital requirements Tax advantage to small owner All profits to owner Sole ProprietorshipDisadvantages Unlimited liability Lack of continuity Difficulty in raising capital Partnership - Advantages Ease of formation Low start-up costs Added sources of venture capital Broader management base Possible tax advantage Limited regulation Partnership-Disadvantages Unlimited liability Lack of continuity Divided authority Difficulty in raising additional capital Difficulty in finding suitable partners Corporation–Advantages Limited liability Specialized management Transferable ownership Continuous existence Legal entity Possible tax advantages Ease of raising capital Corporation–Disadvantages Close regulation Most expensive form to organize Charter restrictions Extensive recordkeeping Double taxation Franchise–Advantages Smaller-than-usual capital investment Less working capital than normally required Prior public acceptance of product or service Management assistance Better-than-average profit margins Franchise–Disadvantages Possible high franchisor fees, supplies, and charges Some loss of independence Possible difficulties in cancelling contracts