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