Accounting CH1 - Chapter 1 Sole Proprietorship Partnership...

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Chapter 1 Sole Proprietorship, Partnership, and Corporation * Sole Proprietorship o A sole proprietorship is a business owned by one person o The advantages are that it is simple to establish, owner controlled, and there are tax advantages. o The disadvantages are unlimited liability for the owner, and potential difficulties in financing and transfer of ownership. * Partnership o A partnership is a business owned by more than one person. o The advantages of a partnership very similar to a sole proprietorship in that it is easy to establish and there are tax advantages, however, a partnership also enjoys shared control and more skills and resources. o The disadvantages are almost exactly like sole proprietorship (without the difficulties in financing) o Law firms are examples of partnerships. * Corporation o A corporation is a separate legal entity owned by stockholders. o The advantages are easy transfer of ownership, no personal liability, and easier to raise funds.
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