FORMS OF BUSINESS ORGANIZATION LEGAL STRUCTURES

SOLE PROPRIETORSHIP One Owner ADVANTAGES Low start up costs Receive all profits – Reinvested in Business Freedom of Operation Easily Dissolved Few Regulations – Cottage Industry Personal Taxation not Corp.

SOLE PROPRIETORSHIP DISADVANTAGES Unlimited Liability – Liable for all debts Capital Problems Resources Problems Must Register if you use a name other than yours - renew every 5 years

PARTNERSHIP “ TWO OR MORE” ADVANTAGES Diversification of skills More Available Capital More Available Resources Low Start up Costs

PARTNERSHIP DISADVANTAGES UNLIMITED LIABILITY Divided Authority Hard to find Suitable Partners

GENERAL PARTNERSHIP 2 or more people who share the operation. Profits and Losses, Liabilities shared

LIMITED/SILENT/SECRET Only Liable for the amount that they have invested Must be 1 or more General Partners with Unlimited Liability Silent – no say in operation Secret – name is not openly known – only by the partners. Has a say in the business operations

PARTNERSHIP AGREEMENT Name and Location of Business Purpose of the Business Names of the Partners Responsibilities of each partner Capital Contributions of each Division of Profits and Loss Termination, Death ETC Provisions Dissolution of Partnership means

PARTNERSHIP AGREEMENT Should be created before going into operation as there is less chance of argument at this point Must be written and not verbal to be valid and not later disputed. Must be signed by all parties