Sole Proprietorship
What is a sole proprietorship?
A sole proprietorship is a business owned and operated by a single individual.
What defines a partnership?
A partnership is a business owned by two or more individuals who share management and profits
What is a corporation?
A corporation is a legal entity that is separate from its owners, providing limited liability.
This business organization has the simplest structure and is owned by one person
Sole Proprietorship
What is the main advantage of a sole proprietorship regarding decision-making?
The main advantage regarding decision-making is that the owner has complete control over all decisions.
How many owners can be involved in a typical partnership?
A typical partnership can have two or more owners, with no upper limit specified.
How does the liability of owners in a corporation differ from that in a sole proprietorship?
Owners (shareholders) have limited liability, meaning they are not personally responsible for business debts.
This type of business can raise capital by selling shares.
Corporation
In a sole proprietorship, who is personally liable for business debts?
The owner is personally liable for all business debts.
What is one disadvantage of a partnership related to liability?
One disadvantage is that partners are personally liable for business debts, which can put personal assets at risk.
What is the lifespan of a corporation compared to a sole proprietorship?
A corporation has an indefinite lifespan, continuing even if ownership changes, unlike a sole proprietorship.
In this organization, two or more people share ownership and responsibilities.
Partnership
How does the lifespan of a sole proprietorship compare to that of a corporation?
What is the decision-making process in a partnership?
Decision-making is typically shared among partners, often requiring consensus or majority agreement.
What is the main difference in taxation between a corporation and a partnership?
Corporations are subject to double taxation; they pay taxes on profits, and shareholders pay taxes on dividends.
This type of business is subject to double taxation.
Corporation
What tax advantages does a sole proprietorship have over a corporation?
A sole proprietorship is taxed as personal income, avoiding double taxation that corporations face.
How is income taxed in a partnership?
Income in a partnership is passed through to the partners and taxed on their individual tax returns.
What role do shareholders play in a corporation's decision-making?
Shareholders elect a board of directors to make major decisions and oversee the corporation.
In this organization, the owner is personally liable for all debts
Sole Proprietorship