1. Forms of Business Ownership Dr. Marilynn K. Skinner

2. Three Forms of Business Ownership  Sole Proprietorship  Partnership  Corporation

3. Sole Proprietorship A business that is owned and managed by one individual who receives all the profits and bears all the losses

4. Sole Proprietorship Benefits  Ease of starting and going out of business  Control over profits and business operations  Pride of ownership  Lower taxes (pays no corporate income taxes)

5. Sole Proprietorship Costs  Unlimited liability  Difficulty in raising financial capital  Responsible for all losses  Management knowledge may be limited

6. Partnership A business that is owned and managed by two or more individuals who receive all the profits and bear all the losses.

7. Partnership Benefits  Easier to raise financial capital  Partners may combine managerial skills  Personal satisfaction  Lower taxes (pays no corporate income taxes)

8. Partnership Costs  Unlimited liability  Shared Profits  Possible conflicts between partners  Possible instability after the death of a partner

9. Corporations A business that is owned by stockholders and has rights and responsibilities as if it were a person.

10. Corporation Benefits  Limited liability  Greater financial capital  Unlimited life  Specialized management

11. Corporations Costs  Increased taxation (pays corporate income taxes)  Difficulty in starting (each state has its own rules for a corporate charter  May be larger, more bureaucratic than other forms of business  Increased government control

12. A Comparison Chart Ease of Entry Personal LiabilityTax Liability Ease of Ownership Transfer Sole Proprietorship Very EasyAll Liability on Owner At owner’s rate May be willed but creates a new entity Partnership Easy – Contract Preferred Partners Share Liability At individual partner’s rate Partner may will ownership but new entity created Corporation Difficult-Must Meet State Requirements NoneAt corporate rate and dividends may be taxed (Double taxation) Shares may be willed does not affect corporate governance

13.  Any Questions??