Chapters 34-36 study guide(1) for Unit 4 test

Chapters 34-36 study guide(1) for Unit 4 test - 36 Business...

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Chapters 34, 35 & 36: Business Organizations -3 main forms for conducting business: 1. Sole Proprietorship 2. Partnership 3. Corporation 1) Sole proprietorship is simplest form of business organization -the owner (sole proprietor) is the business, even if he hires other employees; there is no separate legal entity -Advantages: 1) easy to form and not costly 2) SP has right to make all business and management decisions 3) SP owns all of the business and receives all profits 4) easily transferred or sold: SP does not need anyone else’s approval to transfer or sell business -Disadvantages: 1) SP’s access to capital ($) is limited to personal funds plus personal loans 2) SP personally responsible for all business contracts, torts and debts and will lose entire capital investment if business fails -SP pays personal income taxes on all profits -SP terminates on the death of SP or transfer/sale of business - D/B/A= “doing business as”: SP does business under a trade name instead of his own name;
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