3.063.06 Classify the Forms of Classify the Forms of Business Ownership Business Ownership

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SOLE PROPRIETORSHIP

ONE OWNER 70 % OF THE U.S.

(WANDA IS THE OWNER OF THE

VILLAGE STORE)

SOLE PROPRIETORSHIPADVANTAGES

EASY TO STARTUP.

LIMITED GOVERNMENT REGULATIONS INCLUDING TAXES. (TAXED LESS THAN OTHER FORMS OF BUSINESSES)

ALL PROFITS GO TO THE OWNER.

FREEDOM OF MAKING BUSINESS DECISIONS.

SOLE PROPRIETORSHIPDISADVANTAGES

UNLIMITED LIABILITY– BUSINESS LOSSES– BUSINESS DEBTS

SOLELY RESPONSIBLE FOR ALL ASPECTS OF BUSINESS.

LIFE OF THE BUSINESS IS LIMITED.

PARTNERSHIP TWO OR MORE OWNERS.

– General Partnership Share equally in profits or losses. Each partner liable for all debts.

– Limited Partnership Liable up to amount of investment.. Must have at least one general partner who has unlimited

liability.

< 10% OF U.S. BUSINESSES.

(JOE AND JOHN OWN A MUSIC STORE)

PARTNERSHIPADVANTAGES

RELATIVELY INEXPENSIVE TO START. COMBINE FINANCIAL RESOURCES AND

KNOWLEDGE. SHARED MANGEMENT RESPONSIBILITIES. INCREASED POTENTIAL FOR PROFITS. SHARED RESPOSIBILITY FOR RISK. TAXED LESS THAN A CORPORATION. A CHANGE IN OWNERSHIP DOES NOT ALTER

CONTINUITY OF THE BUSINESS.

PARTNERSHIPDISADVANTAGES

PARTNERS MAY DISAGREE ON DECISIONS.

DECISION OR ACTION OF ONE PARTNER IS LEGALLY BINDING ON OTHER PARTNER.

IF ONE PARTNER DIES, BUSINESS MUST BE REORGANIZED.

CORPORATION

A BUSINESS OWNED BY STOCKHOLDERS. A LEGAL ENITY CHARTERED BY THE

STATE . BOARDS, DIRECTORS, AND OFFICERS

MANAGE THE DAILY OPERATIONS OF A CORPORATION.

(MICROSOFT)

CORPORATIONTYPES

PRIVATE (CLOSED): DO NOT OFFER SHARES OF STOCK TO THE PUBLIC.

PUBLIC (OPEN): SHARES OF STOCK OFFERED TO THE PUBLIC.

CORPORATIONADVANTAGES

DELEGATION OF SPECIFIC MANAGEMENT SKILLS.

LIMITED LIABILITY TO STOCKHOLDERS. EASIER TO SECURE CAPITAL. STOCHOLDERS CAN EASILTY ENTER

OR LEAVE THE BUSINESS.

CORPORATIONDISADVANTAGES

GOVERNMENT REGULATIONS. COMPLEX TO STARTUP AND DISSOLVE. DOUBLE TAXATION.

– CORPORATION– STOCKHOLDERS

COMPLEX RECORD KEEPING

LIMITED LIABILITY COMPANY(LLC)

COMBINATION OF PARTNERSHIP AND CORPORATION.

LIMITED LIABILITY COMPANYADVANTAGES

PASS-THROUGH TAXATION– EARNINGS TAXED ONLY ONCE.– SIMILAR TO PARTNERSHIP.

LIMITED LIABILITY (OWNERS ARE NOT INDIVIDUALLY RESPONSIBLE FOR THE DEBTS OF LLC)

FLEXIBILITY IN STRUCTURE AND MANAGEMENTOF THE BUSINESS.

LIMITED LIABILITY COMPANYDISADVANTAGES

EXPENSE TO STARTUP. EXTENSIVE RECORD KEEPING. IF MEMBER LEAVES, IT CAN DISOLVE

THE LLC.