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acct352 final - Sole Proprietorships They make up 2/3 of...

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Sole Proprietorships - They make up 2/3 of businesses in the US - Less than 1% make more than $1 million Advantages 1. Single Taxation on profits 2. Sole Proprietor receives all the profits 3. Easy and cheap to begin and end Disadvantages 1. Sole proprietor assumes full liability and unlimited risk in debt and tort 2. Opportunity to raise capital may be limited to personal funds and charisma 3. When the proprietor dies, so does the company Partnerships -Agreement, expressed or implied, between 2 or more parties to carry on business for profit. -General partnerships co-owners of the business and share the right to manage the business and participate in its profits. Joint and several Liability - Each partner has unlimited liability - Whatever one partner does, it affects all of the partners, knowingly or not. There are better alternatives than partnerships. Limited partnerships - Everyone is completely liable for the debts of the business - If one guy screws something up, the other partners are not liable except for the money they put in to start. - They are started by statute and therefore have to be filed with the proper state office with a Limited Partnership Agreement. Corporations - Is in itself an entity. Laws of the state of incorporation create corporation. 50 states=50 choices of how to incorporate - The corporation does not have to do business in that state, nor have its base of operations in that state. Corporate Structure Shareholders Directors Officers - Shareholder elect directors (also the owners of the corp.) - Directors represent the shareholder in directing the affairs of the corporation - Officers oversees the every business of the corporation - The owners of the corp. have a limited liability. They only have to worry about how much they put in their initial investment.
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- Shareholders only managerial responsibility to the corp. is to annually elect board members.
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