CHAP 2

FORMS OF
BUSINESS
OWNERSHIP

SOLE partnership
PROPRIETORSHIP
CO-OWNED BY TWO OR MORE PEOPLE
BUSINESS OWNED BY SINGLE OWNER GENERAL: UNLIMITED LIABILITY, PERSONALY
WILLING TO WORK LONG HOURS OBLIGATIONS OF THE BUSINESS
HAVE STRONG ORGANIZATIONAL SKILLS, LEADERSHIP LIMITED PARTNERSHIP: SHARE IN FIRM’S PROFITS OR
SKILLS AND COMMUNICATIONS SKILLS LOSSES,BUT DO NOT INVOLVE IN MANAGING IN
COMPANY
ADVANTAGES DISADVANTAGES
ADVANTAGES DISADVANTAGES
1) ALL EARNINGS GO TO THE 1) INCURS ALL LOSSES
1) ADDITIONAL FUNDING 1) SHARED CONTROL
SOLE PROPRIETOR 2) UNLIMITED LIABILITY
2) SHARED LOSSES 2) UNLIMITED LIABILITY
2)COMPLETE CONTROL 3) LIMITED ACCESS TO FUNDS
3) ABILITY TO SPECIALIZE 3) SHARED PROFITS
3) LOWER TAXES 4) LIMITED SKILLS
 corporation COOPERATIVE
BUSINESS OWNED AND OPERATED FOR THE BENEFITS
state-chartered busIness entity that pays and
OF ITS MEMBERS (NOT TO EARN PROFITS)
Is legally distinct from It owners
the owners of corporatIon are called
shareholders ADVANTAGES
DISADVANTAGES
1) LIMITED LIABILITY
DISADVANTAGES 1) LOW RETURN ON INVESTMENT
2) LOW TAXATION
1) ADDITIONAL ORGANIZATIONAL 2) SEPARATION OF OWNERSHIP & CONTROL
ADVANTAGES 3) CONTINUITY
EXPENSE 3) LIMITED AMOUNT OF INVESTMENT
1) lIMITED LIABILITY 4) DEMOCRATIC
2) FINANCIAL DISCLOSURE 4) SMALL CAPITAL (WHEN COMPARED
2) EASIER ACCESS TO FUNDS 5) REASONABLE PRICES
3) AGENCY PROBLEMS TO CORPORATIONS)
3) TRANSFER OF OWNERSHIP
4) HIGH TAXES