Types Of Businesses
Proprietorships, Partnerships and Corporations
-Operated by a sole or single person.
-Full pride in owning the business -Receives all profits.
-They can also make decisions quickly without having to consult or check with a co-owner or boss.
-Unlimited liability, or complete legal responsibly for all debts and damages arising from doing business.
-Also find it difficult to raise financial capital needed to run and grow a business.
-Difficultly attracting qualified employees.
-A business that two or more people own and operate.
-Legal document: Articles of partnership- identifies how much money each of you will contribute, profits and losses, even to close down.
-Pride of sharing ownership in a business. -Raise more money.
-If money cant be borrowed more partners can be added.
-No corporate income tax. -Each owner often brings special talents to the business.
-Slightly larger size which gives more efficient operations.
-Legal structure is more complex. -When a partner is added or removed a new agreement has to be made.
-Owners have unlimited liability. -Each owner is fully responsible for all debts.
-If one cannot pay part of damages you are expected to pay full.
-Organized business. -Must get a charter to start.
-Specify the amount of stock and ownership shares in the company.
-People who buy stock are the stock owners.
-Stockholders are part owners when they buy stock.
-Used to set up and run the business.
-Ease of rising financial capital. -Easier to borrow large sums of money.
-Ability to grow huge. -Board or directors can hire professional managers to run the business. -Ownership can be easily transferred.
-Limited liability- only the corporation is responsible for debts of the corporation
-Expensive and complex to set up. -Business owners have very little say in management.
-Subject to more regulation by the government than any other form of business.
-Stockholders are subject to double taxation or paying taxes twice on corporate profits.