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