1. 8-1: Sole Proprietorship
PPT Notes

2. Business Organization
Definition: enterprise that produces goods or provides services in order to make a profit

3. Sole Proprietorship
Definition: business owned and managed by one person
Account for more than 70% of all businesses in the U.S.
Generate less than 5% of all sales

4. Advantages of Sole Proprietorships
1. Easy to open and close
Requires money, license, permit, and registered name
2. Few regulations
3. Freedom and control
1 person makes the decisions
4. Owner keeps profits

5. Disadvantages of Sole Proprietorships
1. Limited funds/money
2. Limited life
3.Unlimited liability
Owner is responsible for all financial aspects of the business

6. 8-2: Forms of Partnerships

7. Partnerships
Definition: a business co- owned by 2 or more people who agree on how responsibilities, profits, and losses are divided

8. Types of Partnerships
General partnership: partners share management of the business
Each partner is liable for all business debts/losses

9. Types of Partnerships (continued)
Limited partnerships: partnership in which 1 person is not actively involved in the day-to-day running of the business
This partner is only liable for what he/she has invested

10. Types of Partnerships (continued)
Limited liability partnership (LLP): all partners are limited partners
Not responsible for the debts and liabilities of the other partners

11. Types of Partnerships (continued)
Not all businesses can register as LLP’s
LLP’s usually include medical partnerships, law firms, and accounting firms

12. Advantages of Partnerships
1. Easy to open and close
2. Few regulations
3. Access to resources (money)
4. Joint decision-making
5. Specialization
Each partner may bring specific skills to the business

13. Disadvantages of Partnerships
1. Unlimited liability
Partners are responsible for all of the business’s debt
2. Potential for conflict
Caused by more than 1 person making decisions
3. Limited life
When a partner dies, retires, or leaves, the partnership ends