FORMS OF BUSINESS ORGANIZATION

Once the decision is made to begin a business or to reorganize an exist­ing firm, another decision must be made: how the business will be legally organized. Three types of organization are common: the sole proprietorship, the partnership, and the corporation. Each type has cer­tain advantages.

Sole Proprietorship

The sole proprietorship is the simplest form of doing business. It is the easiest to begin and the most private. After assuring that no zoning laws or local ordinances are being violated, the horticulturist can simply obtain the necessary licenses and insurance, set up shop, hang out a sign, plant a field, load a lawnmower on a truck, and be in business. The sole proprietor puts up the capital, hires and directs all employees, reaps all profits, absorbs all losses, and is personally and totally respon­sible for all debts. There is no separation between the sole proprietor’s personal finances and those of the business. A sole proprietorship may be advantageous if you have substantial personal assets. However, should the new venture fail, your personal assets may be lost.

Sole proprietorships have other disadvantages. One is that the busi­ness can be limited by the weaknesses of the owner. The business usu­ally grows at the outset, then reaches a plateau due to the proprietor’s inability to direct its growth further. Another disadvantage is that the business ends with the death of the owner. If the death is premature and unexpected and no provision has been made for the sale or continua­tion of the business, liquidation may be the only recourse.

In the ornamental horticulture professions, sole proprietorships are common. Retail flower shops, garden centers, and small landscape

maintenance firms are frequently organized in this form, at least at the beginning.