Sole Proprietorship
Why would someone start a sole proprietorship?
Easy to start, easy to end
Few legal requirements
Capital needs are minimum
Sole control
Receives all the profits
What are the 4 types of partnerships?
General, Limited, Joint Venture, and Strategic alliance.
What are the four type of corporations?
Open, Closed, LLC, and Subchapter
A small lawn care business owner buy a high school students would most likely be what type of business?
Sole Proprietorship
What is a partnership agreement
A partnership agreement is the legal document that dictates the way a business is run and details the relationship between each partner
What are some pros to a sole proprietorship?
Freedom, Total control, Minimal government regulations, Business expenses can be used to reduce taxable income, and Lowest tax rate
General partnership definition
When two people come together to start a partnership. Most common type of partnership. (50/50)
Open Corporation Definition
Most common form of a corporation
The stock in which is held my few people who make few purchases, so there is no public market for this stock
There is a board of directors to make policies and directions on how the company should be run and executed
If Starbucks came out with a new drink in partnership with Starburst, and it was only out for a certain amount of time. what type of business would this most likely be?
Joint Venture (Partnership)
Merger definition
A things that combines two business or products
What are some cons to starting a sole proprietorship?
Need to obtain licenses and permits, Limited capital and business skills, Taxes will have to be paid on profits, Risk, and The business and the owner is the same
Limited partnership definition
When a person may have more control and say in a partnership. (70/30)
Closed corporation Definition
An open corporation is a corporation whose ownership shares are available for exchange on a public market.
You could own 30% of a company but have no say.
What type of company has stocks but does not let the public market by it, only its employees or friends and family of the owner?
Closed Corporation
Stock definition
the goods or merchandise kept on the premises of a business or warehouse and available for sale or distribution.
What is one main example of a sole proprietorship?
Small Business
Joint Venture definition
Companies join to complete a specific project, only for a certain time is called.
LLC definition
A limited liability company (LLC) is a business structure in the United States whereby the owners are not personally liable for the company's debts or liabilities. Limited liability companies are hybrid entities that combine the characteristics of a corporation with those of a partnership or sole proprietorship.
What type of partnership is it when two owners may own a different percent in the company?
Limited Partnership
Capital Gain definition
profit that results from a sale of a capital asset, such as stock, bond or real estate, where the sale price exceeds the purchase price. The gain is the difference between a higher selling price and a lower purchase price.
Why do most sole proprietorships fail?
Growing too fast, failing to track finances, overspending, poor execution, failing to change with the times and underestimating the competition.
Strategic alliance definition
Two business work together for mutual benefit
Subchapter Corporation Definition
An S corporation doesn't pay tax. Instead, you and the other owners report the company revenue as personal income. Taxed like a sole proprietorship, and must have good cash flow.
What type of business is taxed like a sole proprietorship, which means the owners report the companies revenue as personal income.
Subchapter corporation
what is the Articles of incorporations
Write legal document that defines ownership and operating procedures in a corporation