1. Business Administration & Management Mr. Bernstein Proprietorships and Partnerships, pp 117-129 March 2016

2. Business Administration & Management Mr. Bernstein Sole Proprietorships A business that is owned and operated by one person 76% of businesses in the US are sole proprietorships Why? Easiest to create Owners receives all profits, controls all decisions The least regulated form of ownership No double taxation 2 Business Administration & Management Mr. Bernstein

3. Sole Proprietorships Disadvantages: Unlimited liability Reliant on one person Raising capital can be difficult 3

4. Business Administration & Management Mr. Bernstein Partnerships Most common form of ownership other than sole proprietorship Why? Partners compensate for the weaknesses of the other Easier to raise capital than sole proprietorship Can expand customer base Partnerships can face difficulties if responsibilities are not clearly outlined, or if interests of a partner change Partnerships must have agreements which clearly outline responsibilities and benefits 4

5. Business Administration & Management Mr. Bernstein General vs. Limited Partners General Partners have unlimited liability and full responsibility for running the business Any General Partner can enter fully binding contracts on behalf of the partnership All Partnerships must have at least one general partner Limited Partners have a defined liability (ie in $$$) and do not participate in business decisions (“silent partner”) 5

6. General vs. Limited Partners 6 Business Administration & Management Mr. Bernstein