part 3 - Business Ownership and Entrepreneurship Business...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Business Ownership and Entrepreneurship
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Business Ownership and Entrepreneurship Basic Forms of Business Ownership A business can be formed in one of three, top-level, ways: sole proprietorship , partnership and corporation . Sole Proprietorship Each form has its own advantages and disadvantages, with many businesses moving from one form to another with growth. The most common type of business (and usually very easy to start), a sole proprietorship, is a business that is owned, and usually managed by one person. There are no special taxes (besides personal income tax) and you keep all the profit.
Background image of page 2
Business Ownership and Entrepreneurship Basic Forms of Business Ownership (cont.) Sole Proprietorship (cont.) The largest disadvantage is unlimited liability – the owner’s responsible for all debts and damages. Other disadvantages include Partnership A form of ownership involving two or more people. Partners share profits but, like sole proprietorship, remain personally responsible for the debts and damages of the business. heavy work load, limited growth and limited life span. Limited partnerships are a special form of partnership to limit liability for most of the partners. One or more partners are designated as general partners and have unlimited liability for the debts of the firm, while the other partners are designated as limited partners and are only liable for their own initial contribution.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Business Ownership and Entrepreneurship Basic Forms of Business Ownership (cont.) Partnership (cont.) Benefits of partnership can include: more financial resources, shared management and skills, longer survival, and no special taxes. The downside of partnerships are still quite a challenge. Liability issues, division of profits, disagreements, and problems in terminating the partnership are big disadvantages. Many compare a partnership to a marriage. Poor communication and interpersonal skills, combined with high liability risk, make many consider incorporating their business.
Background image of page 4
Basic Forms of Business Ownership (cont.) Corporation Incorporating a business offers a host of benefits, and is no longer the domain of big businesses. Even individuals can incorporate! Advantages include: limited liability, ability to issue and sell stock, growth and longevity, ease of sale/transfer, and separation of ownership from management. A corporation is a that often has similar rights in law to those of a natural person. Civil law systems sometimes refer to corporations as “moral persons”. This limits personal liabilities. Corporations can choose to have public ownership, or they can be privately held – even when they are huge like Mars. legal entity
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/13/2009 for the course BMGT 110 taught by Professor Nelson during the Spring '08 term at Maryland.

Page1 / 34

part 3 - Business Ownership and Entrepreneurship Business...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online