chapter 5 (NMM) - NMM AEM 1200 Intro to Bus Mgmt Chapter 5:...

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NMM – AEM 1200 Intro to Bus Mgmt Chapter 5: Forms of Business Ownership Unlimited liability = sole proprietors and general partners must pay all debts and damages  caused by business Limited liability = corporate owners (stockholders) and limited partners are responsible for  losses only up to the amount they invest; personal property not at risk Sole proprietorships Advantages Ease of starting and ending Being your own boss Pride of ownership Leaving a legacy  Retention of profit No special taxes – profits are taxed as personal income tax Disadvantages Unlimited liability Limited financial resources Difficulty in management – tough to attract good employees because sole proprietors  cannot compete with the salary and fringe benefits offered by large companies  Overwhelming time commitment Few fringe benefits Limited growth Limited life span  Types of partnerships  General Partnership o Common ownership o Shared profits and losses o Right to participate in managing the operations of the business Limited partnership o Partnership with one or more general partners and one or more limited partners
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Master limited partnership (MLP) o Partnership that acts like a corporation (traded on the stock exchange) but is taxed  like a partnership (avoids the corporate income tax) Limited liability partnership (LLP)  o Limits partners’ risk of losing their personal assets to only their own acts and 
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chapter 5 (NMM) - NMM AEM 1200 Intro to Bus Mgmt Chapter 5:...

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