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Options for Organizing Business

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priscila bravo

on 18 September 2012

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Transcript of Options for Organizing Business


Partnerships Options for Organizing Business Businesses owned and operated by one individual. Sole Proprietorship Partnerships 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. Corporations Ease and cost of formation Advantages of Sole Proprietorships Secrecy Distribution and use of profits Flexibility and Control of the Business Government regulation Taxation Closing the business Unlimited liability Disadvantages of Sole Proprietorships Limited sources of funds Limited skills Lack of continuity Lack of qualified employees Taxation Sole Proprietorships Corporations 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. Limited Partnerships A partnership that involves a complete sharing in both management and the liability of the business General Partnerships 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. Decision making Regulatory Control Unlimited liability Disadvantages of Partnerships Business responsibility. 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. Taxation Types of Corporations A corporation owned by just one or few people who are closely involved in managing the business. Private Corporation A corporation whose stock anyone may buy, sell or trade. Public Corporation 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. Quasi-public Corporations Nonprofit Corporations 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. Stock Ownership Preferred Stock 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. Common Stock Stock whose owners have voting rights in the corporation, yet do not receive preferential treatment regarding dividends. External sources of funds Advantage of Corporations Limited liability Ease to transfer of ownership Perpetual Life Expansion potential Employee-Owned separation Disadvantages of Corporations Double taxation Disclosure of information What do you think is better? a Sole Proprietorships, a Partnerships or a Corporation? MUCHAS GRACIAS!
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