Proprietorships
A form of business ownership with a single owner who usually actively manages the company.
What is a Sole Proprietorship?
A voluntary agreement under which two or more people act as co-owners of a business for profit.
What is a partnership?
A form of business ownership in which the business is considered a legal entity that is separate and distinct from its owners and from filing a form.
What is a corporation?
Licensing agreement under which one party allows another party to use its name, trademark, patents, copyrights, business methods, and other property
What is a franchise?
When owners are not personally liable for claims against their firm. These owners may lose their investment in the company, but their other personal assets are protected.
What is Limited Liablity?
Ease of formation, retention of control, pride of ownership, retention of profits, possible tax advantages
What are the advantages of a proprietorship?
partnership arrangement that includes at leas tone general partner and at least one limited partner
What is a limited partnership?
A corporation with a limited number of owners that operates under simpler, less formal rules than a C corporation.
What is a statutory close corporation?
The party in a franchise relationship that pays for the right to use resources supplied by the franchisor.
What is a franchisee?
reated by filing a document and paying filing fees in the state where the business is organized
− Organizers draft an operating agreement, which is similar to the bylaws of a corporation
− State laws differ in their requirements
What is forming and managing an LLC?
What is one disadvantage of a sole proprietorship?
Ability to pool financial resources, share responsibilities and capitalize on complementary skills, ease of formation, possible tax advantages.
What are the advantages of being in a partnership?
The most common type of corporation, which is a legal business entity that offers limited liability to all of its owners, who are called stockholders
What is a C Corporation?
A type of franchising arrangement in which the franchisor makes a product and licenses the franchisee to sell it.
What is a distributorship?
Limited liability
• Tax pass-through
• Simplicity and flexibility in management and operation
• Flexible ownership
Being your own boss can be very rewarding but it can also mean long hours and stress.
What is a disadvantage of being a sole proprietor?
Unlimited liability, potential for disagreements, lack of continuity, difficulty withdrawing
What are the disadvantages of a partnership?
A form of corporation that avoids double taxation by having its income taxed as if it were a partnership
What is an S Corporation?
A corporate restructuring that occurs when two formerly independent business entities combine to form a new organization. (the two companies agree to a combination of equals, joining together to form a new company out of the two previously independent firms)
• Complexity of formation
• Annual franchise tax
• Foreign status in other states
• Limits on firms that can form LLCs
• Differences in state laws
What are LLC disdvantages?
Unlimited liability, Limited ability to attract and retain talented workforce, lack of permanence
What are the other disadvantages of being a sole proprietor/
A form of partnership in which all partners have the right to participate in management and have limited liability for company debts
What is a limited liability partnership?
A corporation that does not seek to earn a profit and differs in several fundamental respects from C corporations
What is a nonprofit corporation?
The transfer of total or partial ownership of some of a firm's operations to investors or to another company.
− Gets rid of a part of the company that no longer fits strategic plans
What is divestiture?
• Less risk
• Training and support
• Brand recognition
• Easier access to funding