Forms Of Small Business Ownership

Topics: Business law, Types of companies, Corporation Pages: 25 (470 words) Published: April 14, 2015
Forms of Small
Business Ownership
Chapter 8

Three business
ownership choices:
1.Sole Proprietorship
2.Partnership
3.Corporation

Sole
Proprietors
hip
A business owned and
operated by a single
person.

What are the
Advantages of
Sole
Proprietorship ?

Advantages of Sole
Proprietorship
 Ease and Cost of Formation
 Distribution and Use of
Profits
 Control of the Business
 Government Regulation
 Taxation
 Closing the Business

What are the
Disadvantages of
Sole
Proprietorship?

Disadvantages of Sole
Proprietorship
 Owner’s Lack of Ability and
Experience
 Difficulty in Attracting Good
Employees
 Difficulty in Raising More
Capital
 Limited Life of the Firm
 Unlimited Liability of the

Partners
hip

Partnership


A legal association of two or more
persons as co-owners of an
unincorporated business.

 It is formed with the purpose of
eliminating some of the disadvantages
sole proprietorships while retaining
some of their advantages.

of

What are the
Advantages of
Partnership?

Advantages of
Partnership
 Ease of Formation
 Pooling of knowledge and
skills
 More sources of capital
 Ability to attract and
retain employees
 Tax advantages

What are the
Disadvantages of
Partnership?

Disadvantages of
Partnership
 Unlimited Liability
 Limited life
 Potential conflict
between partners
 Difficulty in
dissolving the
business

What are the
types of
Partnership?

1.General
Partnership
 An association of two or more
persons, each with unlimited
liability, and who are actively
involved in the business.

2.Limited
Partnership
 An arrangement in which the
liability of one or more partners
is limited to the amount of assets
they invested in the business.

Partnership
Agreements
 A document designed to
prevent or at least
minimize disagreements
between partners.

1)The purpose of the business
2)The terms of the partnership
3)The goals of the partners and
the partnership
4)The financial contribution made
by each partner at the beginning
and during the lifetime of the
business

5)The distribution of profit and losses
6)The withdrawal of contributed assets or
capital by a partner
7)The management powers and work
responsibilities of each partner
8)The provisions for admitting new partners
9)The provisions for expelling a partner

10)The provisions for continuing the business
in the events of a partner’s death,
illness, disability, or withdrawal
11)The provision for determining the value of
a departing partner’s interest and method
of payment of that interest
12)The methods of settling disputes through
mediation or arbitration
13)The duration of the agreement and the
terms of dissolution of the business

a
Corporati
on
A legally chartered
enterprise with most of
the legal rights of a
person.

What are the
Advantages of
Corporations?

Advantages of
Corporations
 Limited Liability
 Ease of Expansion
 Ease of transferring
ownership
 Relatively long life
 Greater ability to hire
specialized management

What are the
Disadvantages of
Corporations?

Disadvantages of
Corporations
 More expensive and
complicated to organize
 Double Taxation
 More extensive government
restrictions and reporting
requirements
 Employees lack personal
identification and commitment

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