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SOLE PROPRIETORSHIP

SOLE PROPRIETORSHIP. Description Owned by one person Most common form of business organization . SOLE PROPRIETORSHIP. Advantages Started easy Easy management – make all decisions No business income taxes(must pay personal income taxes on profits) Don’t share profits – keep all

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SOLE PROPRIETORSHIP

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  1. SOLE PROPRIETORSHIP Description Owned by one person Most common form of business organization

  2. SOLE PROPRIETORSHIP Advantages • Started easy • Easy management – make all decisions • No business income taxes(must pay personal income taxes on profits) • Don’t share profits – keep all • Psychological – “I’m the boss.” • Ease of getting out of business

  3. SOLE PROPRIETORSHIP Disadvantages Unlimited liability( may have to sell personal assets to pay business debt) Difficulty in raising financial capital – limited access to funds Size and efficiency Limited managerial experience Difficulty of attracting qualified employees limited life (business ends if owner dies, goes bankrupt, unable to work, etc.)

  4. PARTNERSHIP Description Owned by two or more people Least common form of business organization two types: general (co-equal) and limited (not equal – general/silent)

  5. PARTNERSHIP Advantages • Ease of establishment • Ease of management • Attract financial capital more easily • Slightly larger size makes efficiency easier • Easier to attract top talent • Can benefit from specialization • More access to start-up money than sole proprietorships

  6. PARTNERSHIP Disadvantages Each partner fully responsible for acts of other partners Limited life (partner dies or leaves, partnership must be ended and reorganized under new owner’s name) Potential conflict between partners Division of profits Unlimited Liability

  7. CORPORATION Description Owned by shareholders Earns the greatest percentage of business profits in the U.S.

  8. CORPORATION Advantages • Access to large amounts of funds for expansion • Can grow large and offer opportunity for advancement • Limited Liability • Unlimited Life

  9. CORPORATION Disadvantages Double Taxation (company is taxed on its profits and shareholders are taxed again on dividends they earn from company) Can lose control of company Greater government oversight and legal issues

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