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Starting a New Business
Transcript of Starting a New Business
• Shared management and pooled/
complementary skills and knowledge.
• Longer survival.
• No special taxes. General Partnership:
Master Limited Partnership (MLP):
Limited Liability Partnership (LLP): General Partnership A partnership in which all owners share in operating the business and in assuming liability for the business’s debts. Disadvantages of Partnership• A partnership is a legal form of business with two or more owners Goal 1: adv/dis adv. of Sole Proprietorship Advantages of Partnership Types of Partnerships Goal 2: Differences between Partnership
A sole proprietorship is a type of business in which one person legally makes up the whole company. Advantages Ease of starting and ending business
Being your own boss
Pride of ownership
Leaving a legacy
Retention of company profits
No special taxes Disadvantages Partnership: When two or more people legally agree to become co-owners Three Basic Forms of Business Corporation: Legal entity with authority to act and have liability apart from its owners Limited Partner A partnership with one or more general partners and one or more limited partners Master Limited Partnership: Limited Liability ***there are unlimited liabilities A partnership that looks much like a corporation but is taxed like a partnership and thus avoids the corporate income tax. Limited Liability Partnership A partnership that limits partners’ risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of the people under their supervision. • Unlimited liability.
• Division of profits.
• Disagreements among partner.
• Difficulty of termination. Unlimited Liability
Overwhelming Time Commitment
Few Fringe Benefits
Limited Life Spa Corporations A state-chartered legal entity with authority to act and have liability separate from its owners Advantages of a Corporation Disadvantages of Corporations Goal 3 Describe the differences between general and limited partners, and compare the advantages and disadvantages of partnerships Compare the advantages and disadvantages of sole proprietorship First Three Goals Goal 2 Goal 1 Compare the advantages and disadvantages of corporations Limited Liability
Ability to Raise Money
Ease of Ownership Change
Ease of Attracting Talent
Separation of Ownership from Management Initial Cost
Two Tax Returns
Difficulty of Termination
Possible Conflicts S Corporations A unique government creation that looks like a corporation but is taxed like sole proprietorship and partnerships. In order to qualify as an S Corporation,
A COMPANY MUST Have no more than 100 shareholders.
Have individual shareholders that are citizens or residents of the US.
Have only one class of stock.
Derive no more than 25% of income from inactive sources. Limited Liability Companies A company similar to an S Corporation but without the special eligibility requirements. Advantages of LLC Limited Liability
Choice of Taxation
Flexible Ownership Rules
Flexible Distribution Disadvantages of an LLC No Stock
Limited Life Span
Paperwork END OF OUR FIRST THREE GOALS Conventional (C) Corporation Sharing of ownership and profits without commitments. Legal entity with authority to act and have liability separate from owners. No loss beyond investments. Examples of Sole Proprietors Landscaper
Housecleaning Service Sole Proprietorships