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TYPES OF BUSINESSES

TYPES OF BUSINESSES. SOLE PROPRIETORSHIP. A business that is owned and managed by one individual who receives all the profits and bears all the losses. Benefits: Sole Proprietorship. Ease of starting and going out of business Control over profits and business operations Pride of ownership

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TYPES OF BUSINESSES

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  1. TYPES OF BUSINESSES

  2. SOLE PROPRIETORSHIP A business that is owned and managed by one individual who receives all the profits and bears all the losses.

  3. Benefits: Sole Proprietorship • Ease of starting and going out of business • Control over profits and business operations • Pride of ownership • Lower taxes (pays no corporate income taxes)

  4. Costs: Sole Proprietorship • Unlimited liability • Difficulty in raising financial capital • Responsible for all losses • Management knowledge may be limited

  5. PARTNERSHIP A business that is owned and managed by two or more individuals who receive all the profits and bear all the losses.

  6. Benefits: Partnership • Easier to raise financial capital • Partners may combine managerial skills • Personal satisfaction • Lower taxes (pays no corporate income taxes)

  7. Costs: Partnership • Unlimited liability • If a business cannot pay its obligations, the owner(s) must pay them. • Shared profits • Possible conflicts between partners • Possible instability after death of a partner

  8. CORPORATION A business that is owned by stockholders and has rights and responsibilities as if it were a person.

  9. Benefits: Corporation • Limited liability • Greater financial capital • Unlimited life • Specialized management

  10. Costs: Corporation • Increased taxation (pays corporate income taxes) • Difficulty in starting (each state has its own rules for a corporate charter) • May be larger, more bureaucratic than other forms of business • Increased government control

  11. Which type is best? • Depends on your situation! • They all have strengths and weaknesses.

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