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Sole Proprietorship -- A business owned, andusually managed, by one person. 72%Partnership -- Two or more people legally agree to become co-owners of a business. 8%Corporation -- A legal entity with authority to act and have liability apart from its owners. 20%Unlimited Liability -- Any debts or damages incurred by the business are your debts, even ifit means selling your home, car or anything else.oLimited financial resourcesoManagement difficultiesoOverwhelming time commitmentoFew fringe benefitsoLimited growthoLimited life spanGeneral Partnership -- All owners share in operating the business and in assuming liabilityfor the business’s debts.Limited Partnership -- A partnership with one or more general partners and one or more limited partners.General Partner -- An owner (partner) who has unlimited liability and is active in managingthe firm.Limited Partner -- An owner who invests money in the business, but enjoys limited liability.Limited Liability means that liability for the debts of the business is limited to the amount the limited partner puts into the company; personal assets are not at risk.Master Limited Partnership -- A partnershipthat looks much like a corporation, but is taxed like a partnership and thus avoids the corporate income tax. (One example of a master limited partnership is Kinder Morgan Energy Partners which is engaged in energy storage and operates 75,000 miles of pipelines.)Limited Liability Partnership -- Limits partners’ risk of losing their personal assets to the outcomes of only their own acts and omissions and those of people under their supervision.Advantages of PartnershipsoMore financial resourcesoShared management and pooled/complementary skills and knowledgeoLonger survivaloNo special taxesDisadvantages of PartnershipsoUnlimited liabilityoDivision of profitsoDisagreements among partnersoDifficult to terminateElements of a partnership agreementoCapital contributionsoResponsibilities of each partneroDecision-making processoShares of profits or lossesoDeparture of partnersoAddition of partnersConventional (C) Corporation -- A state-chartered legal entity with authority to act and have liability separate from its owners (its stockholders).Advantages of CorporationsoLimited liabilityoAbility to raise more money for investmentoSize oPerpetual lifeoEase of ownership changeoEase of attracting talented employeesoSeparation of ownership from managementDisadvantages of Corporations oInitial costoExtensive paperworkoDouble taxationoTwo tax returnsoSizeoDifficulty of terminationoPossible conflict with stockholders and board of directorsS Corporation -- A unique government creation that looks like a corporation, but is taxed like sole proprietorships and partnerships.