What form of ownership should be use in this scenario?Susan is considering opening a small business. She currently works for a company as a Human Resource Manager. She has always had a love for...

What form of ownership should be use in this scenario?

Susan is considering opening a small business. She currently works for a company as a Human Resource Manager. She has always had a love for making country crafts and has decided to start selling them at weekend craft shows in her area. Most of her crafts hang on the wall or set on tables, book cabinets, etc. She has a limited budget to start her business and her husband plans to assist with the project.

Asked on by smithy2000

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

In this case, a sole proprietorship seems appropriate.  It would provide the flexibility and low costs that Susan would need.  In addition, Susan's business does not have any of the needs that would make it better to incorporate or form a partnership.

A person might want to incorporate or form a partnership in order to bring in more capital or more expertise.  They might also incorporate to be protected from liability.  None of these concerns apply in Susan's case.  Her business seems to be a low-risk concern that would not be likely to incur large debts.  It would not seem to need capital at this point.

Because she has so few needs, Susan should not bother to form a partnership or to incorporate.  She should set up business as a sole proprietor.

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