Chapter_08 - Chapter 8 Business Legal Forms Copyright...

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Copyright Atomic Dog Publishing, 2006 Chapter 8 Business Legal Forms
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Copyright Atomic Dog Publishing, 2006 8-1 Introduction Capital, revenue and cost are deeply intertwined— actions taken to modify one component usually have an effect on the other two. Launching a new venture normally requires an infusion of capital during the early stages. Before capital can be raised, the venture must establish a legal form that will enable it to solicit and raise debt or equity capital. All entrepreneurs must decide what type of legal form they should use as the structural basis of their company.
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Copyright Atomic Dog Publishing, 2006 8-2 Sole Proprietorship Oldest, common form of private business ownership in the United States—owned and managed by one individual. The person may receive help from others in operating the business but is the only owner. In the eyes of the law, the sole proprietor is the company. The sole proprietor owns a small service or retail operation and is usually an active manager. The owner provides the capital needed to start and operate the business—personal savings or borrowed money. Managerial ability accounts for the success or failure of the business.
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Copyright Atomic Dog Publishing, 2006 8-2a Advantages of a Sole Proprietorship Advantages of a sole proprietorship include: Ease of starting Control Sole participation in profits and losses Use of owner’s abilities Tax breaks Secrecy Ease of dissolving
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Copyright Atomic Dog Publishing, 2006 8-2b Disadvantages of a Sole Proprietorship Disadvantages of a sole proprietorship include: Unlimited liability Difficulty in raising capital Limitations in managerial ability Lack of stability Demands on time Difficulty in hiring and keeping highly motivated employees
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Copyright Atomic Dog Publishing, 2006 8-3 Partnership Partnership law in the United States has been derived from the Uniform Partnership Act (UPA). The more recent Revised Uniform Partnership Act (RUPA) was approved in 1994—in line with modern business practices and trends; retaining many of the valuable provisions in the original act. It was amended in 1997 to provide limited liability for
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This note was uploaded on 10/02/2010 for the course ENTR ENTR 3310 taught by Professor A.lish during the Fall '09 term at University of Houston-Victoria.

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Chapter_08 - Chapter 8 Business Legal Forms Copyright...

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