3.06classify the forms of business ownership what do you know?
TRANSCRIPT
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3.063.06 Classify the Forms of Classify the Forms of Business Ownership Business Ownership
What do you know?
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SOLE PROPRIETORSHIP
ONE OWNER 70 % OF THE U.S.
(WANDA IS THE OWNER OF THE
VILLAGE STORE)
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SOLE PROPRIETORSHIPADVANTAGES
EASY TO STARTUP.
LIMITED GOVERNMENT REGULATIONS INCLUDING TAXES. (TAXED LESS THAN OTHER FORMS OF BUSINESSES)
ALL PROFITS GO TO THE OWNER.
FREEDOM OF MAKING BUSINESS DECISIONS.
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SOLE PROPRIETORSHIPDISADVANTAGES
UNLIMITED LIABILITY– BUSINESS LOSSES– BUSINESS DEBTS
SOLELY RESPONSIBLE FOR ALL ASPECTS OF BUSINESS.
LIFE OF THE BUSINESS IS LIMITED.
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PARTNERSHIP TWO OR MORE OWNERS.
– General Partnership Share equally in profits or losses. Each partner liable for all debts.
– Limited Partnership Liable up to amount of investment.. Must have at least one general partner who has unlimited
liability.
< 10% OF U.S. BUSINESSES.
(JOE AND JOHN OWN A MUSIC STORE)
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PARTNERSHIPADVANTAGES
RELATIVELY INEXPENSIVE TO START. COMBINE FINANCIAL RESOURCES AND
KNOWLEDGE. SHARED MANGEMENT RESPONSIBILITIES. INCREASED POTENTIAL FOR PROFITS. SHARED RESPOSIBILITY FOR RISK. TAXED LESS THAN A CORPORATION. A CHANGE IN OWNERSHIP DOES NOT ALTER
CONTINUITY OF THE BUSINESS.
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PARTNERSHIPDISADVANTAGES
PARTNERS MAY DISAGREE ON DECISIONS.
DECISION OR ACTION OF ONE PARTNER IS LEGALLY BINDING ON OTHER PARTNER.
IF ONE PARTNER DIES, BUSINESS MUST BE REORGANIZED.
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CORPORATION
A BUSINESS OWNED BY STOCKHOLDERS. A LEGAL ENITY CHARTERED BY THE
STATE . BOARDS, DIRECTORS, AND OFFICERS
MANAGE THE DAILY OPERATIONS OF A CORPORATION.
(MICROSOFT)
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CORPORATIONTYPES
PRIVATE (CLOSED): DO NOT OFFER SHARES OF STOCK TO THE PUBLIC.
PUBLIC (OPEN): SHARES OF STOCK OFFERED TO THE PUBLIC.
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CORPORATIONADVANTAGES
DELEGATION OF SPECIFIC MANAGEMENT SKILLS.
LIMITED LIABILITY TO STOCKHOLDERS. EASIER TO SECURE CAPITAL. STOCHOLDERS CAN EASILTY ENTER
OR LEAVE THE BUSINESS.
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CORPORATIONDISADVANTAGES
GOVERNMENT REGULATIONS. COMPLEX TO STARTUP AND DISSOLVE. DOUBLE TAXATION.
– CORPORATION– STOCKHOLDERS
COMPLEX RECORD KEEPING
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LIMITED LIABILITY COMPANY(LLC)
COMBINATION OF PARTNERSHIP AND CORPORATION.
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LIMITED LIABILITY COMPANYADVANTAGES
PASS-THROUGH TAXATION– EARNINGS TAXED ONLY ONCE.– SIMILAR TO PARTNERSHIP.
LIMITED LIABILITY (OWNERS ARE NOT INDIVIDUALLY RESPONSIBLE FOR THE DEBTS OF LLC)
FLEXIBILITY IN STRUCTURE AND MANAGEMENTOF THE BUSINESS.
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LIMITED LIABILITY COMPANYDISADVANTAGES
EXPENSE TO STARTUP. EXTENSIVE RECORD KEEPING. IF MEMBER LEAVES, IT CAN DISOLVE
THE LLC.