f orms of l egal o wnership sole proprietorship partnership corporation
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FORMS OF LEGAL OWNERSHIP
Sole Proprietorship
Partnership
Corporation
SOLE PROPRIETORSHIP
Owned and operated by one person
Easy to create
Single owner receives all profits, incurs any losses, and is liable for the debts of business
SOLE PROPRIETORSHIP Advantages:Advantages:
Easy and inexpensive to createOwner receives all profitsLeast regulated form of ownershipBusiness pays no taxes. Owner pays
personal income taxes which is a lower rate than the corporate tax rate.
SOLE PROPRIETORSHIPDisadvantages:Disadvantages:
Unlimited liabilityFull responsibility for all debtsOwners personal assets are at risk
(i.e., home, car, etc.)May have insufficient skillsUpon death, the business dissolves
PARTNERSHIPA business with two or
more owners
Partners do not have to share a business equally
How the partnership interests are divided are spelled out in the Partnership Agreement.
PARTNERSHIP
AdvantagesAdvantagesInexpensive and easy to createShare ideas, abilities, and financial
obligationsOwners pay taxes as personal
income which is taxed at lower rate.
PARTNERSHIP
DisadvantagesDisadvantagesDifficulty in dissolving partnershipPersonality conflictsPartners held liable for each other’s
actions
CORPORATIONRegistered by the state
and operates apart from its owners
A corporation lives-on after the owners die or have sold interest
Ownership is represented by shares of stock, public or private
CORPORATIONAdvantagesAdvantages
Corporations are separate legal entities from the owners
Perpetual Existence: The corporation is not dissolved upon death of owners
Shareholder’s liability is limited to amount invested However, officers may be personally liable; i.e. Enron’s late Kenneth Lay
CORPORATIONDisadvantages
Expensive to start and requires a lot of legal paperwork. Must hire attorneys.
Corporation owners are seemingly double-taxedThe business’ profits are taxed at a higher corporate rate
The owner’s income from the business (or shareholder’s dividends) is also taxed as personal income
You may use the class set of You may use the class set of magazines as well as hand magazines as well as hand
drawings, but there must be a drawings, but there must be a minimum of minimum of 88 pictures on your pictures on your
collagecollage
Each group will be assigned one of the legal forms of Each group will be assigned one of the legal forms of ownership. Using your notes and class discussion ownership. Using your notes and class discussion you will you will DEFINEDEFINE, , LISTLIST advantages and advantages and disadvantages and disadvantages and CREATE a COLLAGECREATE a COLLAGE illustrating illustrating your form of ownership.your form of ownership.
BUSINESS STRUCTURE PROJECT50 POINTS
RUBRICRUBRIC
Overall Creativity
Definition
Advantages and Disadvantages
Collage
10
10
15
15
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