BUSA+Entrepreneurships++Sole+Proprietorships+and+Partnerships+(15)

BUSA+Entrepreneurships++Sole+Proprietorships+and+Partnerships+(15)

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Entrepreneurship, Sole Proprietorships, and Partnerships ENTREPRENEURSHIP, SOLE PROPRIETORSHIPS, AND PARTNERSHIPS What type of business should I choose? I. Overview An important objective of this chapter is to introduce students to the law of business entity choices. One of the key roles of attorneys engaged in the practice of modern business law is advising their clients on the selection of the best venue for doing business. What seems like a relatively limited set of options is, in fact, quite extensive. These choices can run the gamut from the simplest lemonade stand set up for a youngster to a multinational publicly-traded corporation. With each choice, the law provides a list of pros and cons. For example, if a person seeks maximum privacy in his or her financial affairs, a private form of sole proprietorship may be best. Compare, however, the business person who wants to leverage the maximum utilization of other people's money while limiting her personal financial exposure. That person may find the corporate form best suited for her needs. The law literally has something for everyone. The real issue is first finding out what options are legally available and then choosing the best fit. That fit should be tailored by sound advice from a number of quarters including law, accounting, finance, and business management strategy. It is this constant interdependent equation that makes the practice of business law so difficult yet so interesting. The vast majority of the users of this book may never go to law school. Yet that same majority will be influenced every working day by the business entity law choices made in whatever business pursuits they chose. Many of these choices, like partnerships and corporations, will be explained in the next few chapters. Take, for example, sole proprietorships, covered in this chapter. It remains the most widely used form of business entity even though it may no longer be the most important in sheer economic terms. With the advent of the so-called "information highway" and more emphasis on entrepreneurial niche marketing of goods and services, this form of business may enjoy a renaissance in the Twenty-First century. As we will see this business choice is easy to form and easy to operate but with several liability disadvantages. See outline below. One of the key distinctions between the partnership form of doing business and the corporate format is the corporation's ability to have an indefinite or perpetual existence. Under state laws of incorporation, a corporation is allowed to continue its juristic existence in spite of the death of its key players. This is not true with partnerships. A partnership is intrinsically tied to the continuing existence of the partners. Partnerships are literally more personal. When the partner is gone, so too is the partnership. One of the questions students frequently ask is: how is it that multi-national business
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This note was uploaded on 03/19/2008 for the course BUSA 2106 taught by Professor Lee during the Summer '07 term at UGA.

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BUSA+Entrepreneurships++Sole+Proprietorships+and+Partnerships+(15)

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