CHAPTER 26 SECTION 1 Tamara lampkin

26-1 Goals State the definition of the three basic forms of business organization Contrast the attributes of the basic form of business organization

Three principal forms of business Sole proprietorships Partnerships Corporation

Three business forms Sole proprietorships- the simplest, most flexible, and easiest to start Partnership- an association of two or more persons to carry on, as co-owners, a business for profit Corporation- a legal entity that is treated as am artificial person by the law.

FACTS There are no significant legal requirements for organizing or conducting most sole proprietorships. Some types of business, such as those selling food or securities, are subject to special government regulations regardless of the legal form of organization

FACTS The positive feature of the partnership is that it combines the capital, labor, skill, and knowledge of two or more persons. However, having a partner also greatly increases a businessperson’s exposure to potential liability from that partner’s actions

FACTS Limited liability, ease of transferring ownership interest, and perpetual life make the corporate form attractive to potential investors and professional mangers alike. As a consequence it can acquire the financial strength and managerial expertise to attempt larger projects than other forms of business organization

FACTS As a consequence of the corporations being treated as an entity in its own right under the law, investors in a corporation only run the risk of losing what they have invested in it, not all their personal wealth