Sole Proprietorship
a business that is owned and usually managed by one person
partnership
a legal form of business with two or more owners
corporation
a legal entity with authority to act and have liability apart from its owners
Advantage of a Sole Proprietorship
ease of starting and ending the business
being your own boss
pride of ownership
leaving a legacy
retention of company profits
No special taxes
Disadvantage of a Sole Proprietorship
unlimited liability- the risk of personal losses
limited financial resources
management difficulties
overwhelming time commitment
few fringe benefits
limited growth and life span
General Partnership
a partnership in which all owners share in operating the business and in assuming liability for the business's debts
limited partnership
a partnership with one or more general partners and one or more limited partners
general partner
an owner who has unlimited liability and is active in managing the firm
limited partner
an owner who invest money in the business but does not have any management responsibility or liability for losses beyond the investment
limited liability
the responsibility of a business's owners for losses only up to the amount they invest
Master limited partnership
a partnership that looks much like a corporation but is taxed like partnership and thus avoids the corporate income tax
limited liability partenership
limits partners' risks of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision.
Advantages of Partnerships
more financial resources
shared management and pooled skills and knowledge
longer survival
no special taxes
Disadvantages of Partnerships
unlimited liability
division of profits
disagreements among partners
difficulty of termination
conventional corporation
a state-chartered legal entity with authority to act and have liability separate from its owners
Advantages of Corporations
limited liability
ability to raise more money for investment
size
perpetual life
ease or ownership change
ease of attracting talented employees
separation of ownership from management
Disadvantages of Corporations
initial cost
extensive paperwork
double taxation
two tax returns
size
difficulty of terminations
possible conflict with stockholders and board of directers
S Corporation
a unique government creation that looks like a corporation buy is taxed like sole proprietorship and partnerships
Limited liability company (LLC)
a company similar to an S corporation but without the special eligibility requirments
merger
the result of two firms forming one company
acquisition
one company's purchase of the property and obligations of another company
vertical merger
the joining of two companies involved in different stages of related business
horizontal merger
the joining of two firms in the same industry
conglomerate merger
the joining of firms in completely unrelated industries
leveraged buyout
an attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing
franchise agreement
an arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory
franchisor
a company that develops a product conception and sells others the rights to make and sell the products
franchise
the right to use a specific business's name and sell its products or services in a given territory
franchisee
a person who buys a franchise
Advantages of Franchises
management and marketing assistance
personal ownership
nationally recognized name
financial advice and assistance
lower failure rate
Disadvantages of franchises
large start-up costs
shared profit
management regulation
coattail effects'
restrictions on selling
fraudulent franchisors
cooperative
a business owned and controlled by the people who use it