Ownership

Four Major Types of Business Ownership

Sole Proprietorship

  • business owned by one person
Advantages:
  • complete control and decision making power
  • no corporate tax payments
  • receives all profits
  • simple and inexpensive to make
Disadvantages:
  • accepts all the risk
  • personally liable for all debts and court judgments
Policies and Regulations:
  • sole ownership
  • can hire employees to help manage
  • quarterly tax payments
Summary Website:


http://www.encyclopedia.com/topic/Sole_proprietorships.aspx


Examples:

  • Catering Company
  • Tutoring
  • Home Healthcare

Partnership

  • business with two or more owners who share in the decisions,assets, liabilities, and profits of the business
  • General partnership: every partner is involved in the management of the firm
  • Limited partnership:some partners are passive investors/don't manage the operations of company


Advantages:
  • share decisions and risks
  • simpler adn less expensive to create than any other form of business


Disadvantages:
  • general partners are held personally liable for business debts and obligations


Policies and Regulations:


  • clearly define what partner has what power


Summary Site:

http://smallbusiness.chron.com/rules-partnership-agreement-24228.html



Examples:


  • Google
  • Apple
  • Twitter

Corporation

  • a business that is registered by a state and operates apart form its owners
Advantages:


  • limited liability it provides to the shareholders
  • if the business has debts that it cannot pay, shareholders aren't liable
  • owner to protect their personal assets
Disadvantages:
  • double taxation
  • complex and expensive to set up
Policies:


  • C Corporation: business that pays taxes on earnings
  • Subchapter S corporation: corporation that is taxed like a partnership
  • Income passed through share holders
Examples:
  • American Airlines
  • Taco Bell
  • Statefarm
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Limited Liability Company (LLC)

  • not a partnership or corporation
  • owners called members, have the same liability protection of a corporation
Advantages:


  • same liability protection as a cooperation
  • losses, profits, and expenses flow through the company to individual members avoiding the double taxation of a corporation
Disadvantages:



  • dissolves when a member dies or undergoes bankruptcy
Policies and regulations:

  • regulations vary through each state
  • members agree to profit distribution
Summary:

http://smallbusiness.chron.com/limited-liability-company-regulations-4981.html

Citations

"Advantages and Disadvantages of Sole Proprietorship." New York Times. N.p., n.d. Web. 17 Sept. 2014.


"Rules and Regulations for a Sole Proprietorship." Business & Entrepreneurship. N.p., n.d. Web. 19 Sept. 2014.


Maxwell, G., "Sole Proprietorship." Encyclopedia of Small Business. 2007, "Proprietary Colonies." American Eras. 1997, "Sole Proprietorship." West's Encyclopedia of American Law. 2005, and "Sole Proprietorship." Gale Encyclopedia of U.S. "Sole Proprietorship."Encyclopedia.com. HighBeam Research, 01 Jan. 2007. Web. 19 Sept. 2014.


"Rules of a Partnership Agreement." Small Business. N.p., n.d. Web. 19 Sept. 2014.