Types of Businesses
- Owned and operated by a sole, or single person.
- The proprietor has full pride in owning the business and receives all the profit.
- The proprietor can make decisions quickly without having to consult with a co-worker or boss.
- The proprietor has unlimited liability, complete responsibility of the business.
- The difficulty of attract qualified employees.
- Takes 2+ people to operate.
- Legal agreement called Articles of Partnership identifies how much $$$ each partner will play in the business.
- Clarifies profits and losses.
- Pride of sharing ownership in a business
- Raise more $$$
- No corporate income tax
- Each owner often brings special talent to the business
- Slightly larger size than proprietorship
- Complex legal structure; when a person is added or removed, a new agreement must be made
- · Unlimited liability (each owner is fully responsible for all the debts of the partnership)
- If company is sued and other owners cannot pay, you could be required to pay 100% of damages
- Charter – government document granting permission to organize
- Specifies amount of stock that will be issued.
- The corporations uses the money received from selling stock to setup and run the business.
- The stockholders elect a board of director to act on their behalf.
- The board hires managers to run the corporation on a daily basis.
- The ease of raising financial capital.
- With the ease of raising capital corporations can grow huge.
- The board of directors can hire professional managers to run the business.
- The ownership of the corporation can change easily.
- Limited liability
- They often are expensive and complex to set up.
- The business owners have very little say in the management of the business.
- Corporations are subject to more regulations by government.
- Stockholders are subject to double taxation, or paying taxes twice on corporate profits