BUSINESSES

THE Leslie Franks

Partnership

Structure
  • articles of partnership: identifies how much money each of you will contribute and what role each partner will play in the business

2 types of partnerships

1) General - all partners are responsible for management

2) Limited - one partner is not active in the daily running of the business but may contribute to funds

Advantage vs Disadvantage

ADVANTAGE
  • pride of sharing ownership
  • more money is usually made
  • no corporate income tax
  • makes for more efficient operations

DISADVANTAGE

  • complex legal structure / agreement
  • each owner is responsible for all the debts of the partnership

Proprietorship

Structure


  • Sole Proprietorship - a business owned and operated by a single person
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Advantages vs Disadvantages

ADVANTAGE

  • can make decisions quickly without having to consult or check with co-owner or boss

DISADVANTAGE

  • unlimited liability or legal responsibility for all debts and damages that there may be
  • if the business has debts, the owners personal items may be seized to pay off the debts
  • difficult to raise financial capital
  • difficult to attract qualified employees

Corporations

Structure


  • charter - government document granting permission to organize
  • includes name, purpose, address, and other features of the business
  • also specifies amount of stock (ownership shares of the corporation that will be issued)
  • people who buy stock = stockholders - become part owners
  • stockholder elect an board of directors to act on their behalf
  • the board hires managers to run the daily business

Avantages vs Disadvanges

ADVANTAGE
  • ease of raising financial capital
  • easier to borrow large sums of money
  • ease of raising capital - helps corporation grow

DISADVANTAGE

  • expensive and complex to set up
  • the business owners have little say in the management of the business
  • are subject to more regulation by government
  • stockholder are subject to double taxation