Definitions
Define a Franchise:
a company owned by one or more people
This is a company that is owned by one person. It has unlimited liability and is very risky to start
Sole Proprietorship
Sole Proprietorship
Advantage: owner gets all profits, lower tax rates, easy to create
Disadvantages: difficult to raise capital, all resources rely on one owner, unlimited liability
combining two or more companies
This business offers liability protection for its owners; also, it is considered an independent entity.
Corporation
Corporations
Advantages: unlimited life, financial power, easy to transfer ownership
Define a Corporation:
a legal entity treated as an individual charted, funded, registered through state
An advantage of owning this business is that you can decrease your competition and increase your goodwill.
Partnership
Partnerships
Advantages-ability to share ideas, inexpensive to start, easy to secure capital
Disadvantages-Personality conflicts, partnership ends when one person leaves, each partner is liable for the others actions
Ownership share is available for exchange on a market in this type of business.
Open Corporation
Franchise
Advantages- easy to start, rely on the products, rely on proven methods
Disadvantages- it must be operated like all the other stores, the owner could be strict on how it should be run, limited to what you can buy or sell
Define Articles of Incorporation:
a set of documents filed to be able to start a business
It is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with limited liability of a corporation.
LLC