3 Sole ProprietorshipDefinition: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 makingAny 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/knowledgeMore start-up money
9 Partnership Disadvantages: Owners have unlimited liability Profits must be dividedDisagreements can occur
10 Partnership ExamplesSimple, low risk businesses that have two or more owners
11 Partnership Agreement Details:Names, investmentsHow profits and losses will be handledAuthority and responsibilitiesHow 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 & bylawsExtensive record keepingDouble taxationCorporate Profits and owners income are both taxed
15 Corporation ExamplesMany 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 corporationLimited liability for ownersNot subject to double taxationOwners only pay taxes once
18 Limited Liability Company (LLC) Disadvantages:Cant sell stocksAround $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 DefinitionLegal entity that makes money for reasons other then the owners profit.Profits must remain in company