1. Selecting A Form of Business Ownership

2. Considerations Legal Liability Ownership / Management
Cost / Complexity
Tax Liability
Legal Liability
Ownership / Management

3. Sole Proprietorship
Definition:
A business that is owned and operated by one person.

4. Sole Proprietorship Advantages: Very easy and cheap to create
Business pays no taxes only the owner does (personal income tax)
Owner receives all profits and makes all decisions

5. Sole Proprietorship Disadvantages: Owner has unlimited liability
Full responsibility for all debt and actions of the business.
Owner’s personal assets (cars, home, savings) are at risk!!!!!
Limited skills, expertise, and funding

6. Sole Proprietorship Examples
Part-time businesses that are not risky.
E.G. Grandma’s sweater making
Any business can, in theory, be a sole proprietorship.

7. Partnership A unincorporated business with two or more owners.
Definition:
A unincorporated business with two or more owners.

8. Partnership Advantages: Easy and cheap to create
Business pays no taxes only the owners do (personal income tax)
More ideas/knowledge
More start-up money

9. Partnership Disadvantages: Owners have unlimited liability
Profits must be divided
Disagreements can occur

10. Partnership Examples
Simple, low risk businesses that have two or more owners

11. Partnership Agreement
Details:
Names, investments
How profits and losses will be handled
Authority and responsibilities
How business will be dissolved

12. Corporation (Inc)
Definition:
A business registered by a state and operates as it’s own entity that pays taxes on profits.

13. Corporation Advantages:
Limited Liability – owners are responsible only up to the amount they invested.
Able to raise funds by selling stock

14. Corporation Disadvantages: Expensive to set-up ($500-$2,500)
Need Articles of Incorporation & bylaws
Extensive record keeping
Double taxation
Corporate Profits and owners income are both taxed

15. Corporation Examples
Many of the big businesses you see.

16. Limited Liability Company (LLC)
Definition:
A business registered by a state and operates as it’s own entity and receives tax benefits.

17. Limited Liability Company (LLC)
Advantages:
Simpler to set-up than a corporation
Limited liability for owners
Not subject to double taxation
Owners only pay taxes once

18. Limited Liability Company (LLC)
Disadvantages:
Cant sell stocks
Around $500 to set-up

19. Limited Liability Company (LLC) Examples
Many small business with more than one owner that are not in need of outside investing.

20. Nonprofit Corporation
Definition
Legal entity that makes money for reasons other then the owners profit.
Profits must remain in company