Sole Proprietorship
What happens if the owner dies?
The Business Dissolves
How many people can be owners in a partnership?
2 or more
Dual Taxation
An organization that has been granted tax-exempt status because it serves a social cause or a charitable purpose
nonprofit
What type of business are most law firms?
LLC
List 3 Advantages of Sole Proprietorships
Easy and Inexpensive to create
Owner has complete authority over all business activities
Owner receives all the profits
Least Regulated form of ownership
Business itself pays no taxes (because it is not separate from the owner)
What happens if an owner wants to sell the business?
All owners have to agree otherwise the owner is stuck in the partnership
List 3 Advantages of a Corporation
Easy to obtain capital/credit
Limited Liability
A corporation can continue to exist after the death of its owners
Easy to transfer ownership to another party
They are liable only up to the amount of their individual investment.
Limited Liability
What is the most common type of business ownership in the United States?
Sole Proprietorship
List 3 Disadvantages of Sole Proprietorships
Owner has unlimited liability (full responsibility for all debts and actions of the business).
Raising capital may be more difficult
Limited by total reliance on the abilities and skills of the owner
Death of the owner automatically dissolves the business
List 3 Advantages of Partnerships
Easy and Inexpensive to create
Shared time commitment/responsibilities
Owners receive all the profits
Partners can share ideas
Easier the secure investment capital and in greater amounts
Combined Resources
Who is hired to make decisions for the corporation?
Board of Directors or Board of Trustees
Full responsibility for all debts and actions of the business.
Unlimited Liability
What form of business has the most government regulations?
corporation
What is the tax structure?
taxed once at the owners tax bracket
List 3 Disadvantages of Partnerships
Difficult to dissolve one partner’s interest in the business without dissolving the partnership
Personality conflicts among partners
Partners can be held liable for each other’s actions
Uncertain life/transferability
List 3 Disadvantages of Corporations
Difficult to form and operate
More government involvement
Complicated structures
Employees who are not owners may not be committed to the business
Separate owners and managers
Dual taxation
Corporations must publish annual reports, which could give away important secrets to competitors
The value of company shares can change depending on changes in the stock market
What are the owners of a corporation called?
Shareholder
A hybrid entity that combines the characteristics of a corporation and partnership.
LLC
What can be kept secret in a Sole Proprietorship that corporations have to publish publicly?
Financial Information
What is the document that must be filed with a lawyer/notary to start a partnership?
Partnership Agreement
What is the form you have to file to start a corporation?
Articles of Incorporation
money, wealth, and valuable assets used to start a business, make investments, and generate more income
capital
List 4 sections included in a Partnership Agreement
• Individuals Involved
• Nature of Business
• Name of Business
• Day-to-Day Operations
• Capital Contribution
• Profit & Loss
• Term
• Withdrawal
• Non-Compete Agreement