Business Law 201 Notes

Business Law 201 Notes - Chapter 35 pgs 724-726 I. Basic...

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Chapter 35 pgs 724-726 I. Basic Forms of Business Organizations A. Sole Proprietorship: A business owned by a single person or family. Simplest form, the owner is the business; thus anyone who does business without creating a separate business organization has a sole proprietorship Owns entire business and receives all the profits, assumes all of the risk. B. Partnership: An agreement by two or more persons to carry on, as co-owners, a business for profit. C. Limited Liability Company: A business owned by “members” offers limited personal liability without the downside of corporations. C. Corporation: A legal entity formed in compliance with the statutory requirements of its state of incorporation, owned by shareholders whose liability is limited to their investment in the corporation, and managed by (i) a board of directors elected by the shareholders and (ii) officers employed by the board of directors. II. Sole Proprietorship A. Advantages of the Sole Proprietorship 1. Business and the owner are one and the same all profits go to the owner 2. Easy and inexpensive to set-up 3. Taxed at the individuals personal tax rate B. Disadvantages of the Sole Proprietorship 1. Potential for unlimited personal liability for business obligations 2. Relies only on the individual to raise capital for the business
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This note was uploaded on 05/31/2011 for the course BUS 201 taught by Professor Wiest during the Winter '07 term at Grand Valley State.

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Business Law 201 Notes - Chapter 35 pgs 724-726 I. Basic...

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