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Options for Organizing Business
Transcript of Options for Organizing Business
Businesses owned and operated by one individual.
It is a legal document, that set forth the basic agreement between partners.
A legal entity, created by the state, whose assets and liabilities are separate from its owners.
Ease and cost of formation
Advantages of Sole Proprietorships
Distribution and use of profits
Flexibility and Control of the Business
Closing the business
Disadvantages of Sole Proprietorships
Limited sources of funds
Lack of continuity
Lack of qualified employees
A form of business organization defined by the Uniform Partnership Act as "an association of two or more persons who carry on as co-owners of a business for profit"
Types of Partnerships
Articles of Partnerships
A business organization that has at least one general, and at least one limited partner, whose liability is limited to his or her investment in the business.
A partnership that involves a complete sharing in both management and the liability of the business
Ex: Circo du Soleil
Ex: Oil-drilling partnerships, real estate partnerships.
Advantages of Partnerships
Ease of organization.
Availability of capital and credits.
Combined knowledge and skills
Disadvantages of Partnerships
Life of partnership.
Distribution of profits
Limited sources of funds
Partnerships are Quasi-taxable organizations. Partnerships do not pay taxes.
Partners, must report their share of profits on their individual tax returns and pay taxes at the income tax rate for individual.
Types of Corporations
A corporation owned by just one or few people who are closely involved in managing the business.
A corporation whose stock anyone may buy, sell or trade.
A Private Corporation can become
Public Corporation by Initial Public Offering. As well a Public Corporation, can be taken private, when select few people buy all the firm's stock.
Trivia: Which is the the third-largest IPO in U.S. history?
Types of Public Corporations
Corporations owned and operated by the federal, state, or local government.
Corporations that focus on providing a service rather than earning a profit but are not owned by a government entity.
The board of Directors.
Elements of a Corporation
A group of individuals, elected by the stockholders to oversee the general operation of the corporation, who set the corporation's long range objectives.
A special type of stock whose owners, though not
generally having a say in running the company, have a claim to profits before others stockholders do.
Stock whose owners have voting rights in the corporation, yet do not receive preferential treatment regarding dividends.
External sources of funds
Advantage of Corporations
Ease to transfer of ownership
Disadvantages of Corporations
Disclosure of information
What do you think is better? a Sole Proprietorships, a Partnerships or a Corporation?