Supplements Profitmaking Sole enterprises proprietorship Partnership Corporation UNINCORPORATED

Supplements

� Profit-making �Sole enterprises proprietorship: �Partnership: �Corporation:

� UNINCORPORATED business owned by one person. � Owner is manager � Accounting: viewed as a separate entity � Taxes: not separate from owner

� UNINCORPORATED business owned by TWO or more persons knows as PARTNERS. � Usually created by partnership agreement (how to divide income and how to distribute net assets upon dissolution). � Legally, each partner in a general partnership is responsible for the debts of the partnership. � Accounting: Considered a separate entity � Taxes: More complex, but flows to partners tax returns. � Other types of partnerships: Limited partnerships

� Incorporated under state regulations and laws. � Owners are called SHAREHOLDERS or STOCKHOLDERS. � Owners own shares of stock in the company � ACCOUNTING: Separate entity � Taxes: Separate entity -- corporate tax � Board of Directors -- Oversight

� Dominant form of business in the US (by size) � Advantages of Corporate form: �Limited liability of owners �Continuity of life �Ease of transferring ownership (sale of stock) �Opportunity to raise large amounts of capital (cash) from large numbers of people. � Disadvantages �Double of Corporate form: taxation