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
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