Sole Proprietorship, Partnership and Corporations
Entrepreneur: Willing to take a risk to start a business Gather the factors of production Must learn as much as possible about the
business Laws, regulations and tax codes
Expenses Purchasing of materials and capital
Advertising Letting potential customers and vendors/partners
know of your business Receipts and Record Keeping
Must keep a solid system of tracking expenses and income
Essential for safely saving and filing records Risk
Every business has this element Balancing between risk and reward is considered
by some the most essential part
Income – All Expenses = Profits
Expenses: Wages, Taxes, Parts, Utilities, etc.
Business owned and run by one individual Proprietor = Owner Oldest form and most common business Advantages:
Ease of Operation Potential Profits “You’re the Boss”
Disadvantages: Limited Life Limited Funds Limited Abilities Unlimited Liabilities (legally responsible)
Business owned by two or more persons Limited: partners not sharing equal
responsibility General: full duties and responsibilities Advantages:
More Money (Capital) Available “Two heads are better than one”
Disadvantages: Unlimited Liability Limited Life Limited Funds Partners May Disagree
Business licensed (charter) by state or federal government as a legal individual
Stockholders (shares) are true owners of corporation
Advantages: Limited Liability Unlimited Life Easy Transfer of Ownership
Disadvantages: Costly and Complicated to set up Double Taxation
Corporate and Personal Income Tax