Chapter 06(1)-2 - Essentials of Entrepreneurship ENTR 2001...

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Essentials of Entrepreneurship ENTR 2001 Session 9 Copyright 2013 Jack M. Kaplan & Anthony C. Warren Patterns of Entrepreneurship Management Chapter 6 Setting Up the Company
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Project Teams
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Team Alpha
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Team Beta
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Team Gamma
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Team Delta
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Team Epsilon
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Team Zeta
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Presentation Outline What form of Ownership is Best? Forms of Doing Business Setting Up a Proprietorship Setting Up a Partnership Setting Up a Limited Liability Company (LLC) Setting Up a “C” Corporation Authorized in 26 U.S. Code Chapter 1, Subchapter C Setting Up an “S” Corporation Authorized in 26 U.S. Code Chapter 1, Subchapter S Legal Issues Comparison Organization Charts Copyright 2013 Jack M. Kaplan & Anthony C. Warren
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What Form of Ownership is Best? Ask yourself these questions: 1. How big can the business potentially become? 2. How much control do you need in the decision-making process of the company? 3. How much capital is needed to start the business? 4. What tax considerations are important? 5. In case of failure, to what extent are you willing to be personally responsible for debts created by the business? 6. Is it important that the business continue in case of the owner’s incapacity or death? Copyright 2013 Jack M. Kaplan & Anthony C. Warren
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Forms of Doing Business The legal form of the business is selected from: Sole Proprietorship Partnership Limited Liability Corporation (LLC) C-Corporation S-Corporation The form should be determined in light of the business’ short- and long-term needs’ Begin with the end in mind (harvest) Copyright 2013 Jack M. Kaplan & Anthony C. Warren
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Sole Proprietorship Overview: A Sole Proprietorship has a single owner and only requires local business licenses to open. Pros: Simple to create Low start up fees No special legal restrictions Cons: Unlimited personal liability Limited access to capital Lack of Continuity for the Business Copyright 2013 Jack M. Kaplan & Anthony C. Warren
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Partnerships Overview: A partnership is usually defined as an association of two or more people carrying on as co-owners of a business for profit. Pros: Easy to Establish Division of Profits Ability to attract partners Little Government Regulation Cons: Unlimited Liability of at least one Partner Capital Accumulation not possible
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