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Characteristics of Business
Organizations
Sole Proprietorship
OBusiness owned and run by one person
OLargest number of businesses in the US
Partnership
OBusiness owned by 2 or more people
OFewest number in the US
Corporation
OA form of a business organization recognized by the law as having all the rights of individuals
OGenerates the most business
Profits and losses: shared or not?
Sole Proprietorship
ONot shared
Partnership
OShared between partners according to partnership agreement
Corporation
OShared with stockholders
ODividends
Liability: Limited or Unlimited. Discuss
Sole Proprietorship
OUnlimited
Partnership
OUnlimited or limited depending on how the Articles of Partnership are written
Corporation
OLimited
Management: Is it easy or difficult?
Sole Proprietorship
OEasyOYou can make decisions quickly
Partnership
OCan be difficult as each owner may have their own ideas
Corporation
OCan hire management teams to run most efficiently
Taxes: What type are paid?
Sole Proprietorship
OIndividual Income Tax
Partnership
OIndividual Income Tax
Corporation
ODouble Taxation –OIndividual Income Tax for shareholders
OCorporate Tax for the business
Personal Satisfaction: What kind of
satisfaction do owners get?
Sole Proprietorship
OLotsOThey reap all the benefits
Partnership
OLotsOThey can reap many benefits
Corporation
OStock Dividends – yesONo satisfaction from running your own business or being your own boss
Start-up: Is it easy or difficult? How do you
do it?
Sole Proprietorship
OEasyOApply for a business license
Partnership
OEasyONeed Articles of Parnertership drawn up listing who is responsible for what
Corporation
OHardOMust file for permission from the gov’t
OIf approved a charter will be granted
OThen you can sell stock
Financing Growth: Is it easy to raise money for
growth?
Sole Proprietorship
OVery difficultOBanks less likely to lend to an individual
Partnership
ODifficult depending on the size of the partnership
Corporation
OVery easyOSell more stock
Efficiency: Can the business operate
efficiently?
Sole Proprietorship
ODepends on the size of the business
OCan be difficult if you are the one in charge of all aspects of the business
Partnership
OCan be difficult depending on the size
OMore efficient than a sole proprietorship
Corporation
OVery easyOCan hire a professional team to manage it
Attracting New Employees: Easy or
Difficult?
Sole Proprietorship
ODifficultOYou cannot offer the same benefits and pay
Partnership
ODifficult depending on the size
Corporation
OEasyOCan offer many incentives
Life of the Business: How long does it
continue?
Sole Proprietorship
OLimitedOOwner dies – business dies
Partnership
OLimited and UnlimitedODepends on how the Articles of Partnership are written
Corporation
OUnlimitedOStock can be sold to others when someone does not want it any longer
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