2. S OLE P ROPRIETORSHIP : ONE OWNER 75% of all businesses Owner has unlimited liability for all debts Income or loss will be reported on owner’s personal income tax return

3. AdvantagesDisadvantages Full profit Full control Easy to start up Little regulation Easy to dissolve Unlimited liability Limited financial resources and capital Hard to attract and keep good employees Limited life

4. P ARTNERSHIP : TWO OR MORE OWNERS 7% of all business General partnership: all partners have unlimited liability Limited partnership: limited partner’s responsibility to debts is limited to the percentage he/she has invested

5. AdvantagesDisadvantages More access to financial resources and capital Pool resources and skills Easy start up Little regulation Potential for conflict Unlimited liability Limited life

6. W HAT DISADVANTAGES DO S OLE PROPRIETORSHIPS AND PARTNERSHIPS HAVE ? Unlimited liability Limited financial resources

7. H OW DO CORPORATIONS SOLVE THOSE PROBLEMS : Corporation: Legal entity owned by individual stock holders 20% of all businesses Make 90% of all goods sold in the nation A person in the eyes of the laws: Must pay all the taxes Can engage in business Can get sued and sue others

8. P RIVATE VS. P UBLIC Private (Closely held): few owners tend not to trade stock, pass it on to family members Public (Openly held): many stockholders; stocks traded on open market

9. C ORPORATIONS AdvantagesDisadvantages Limited liability for owners (only lose their investment) More access to capital Double taxation More government regulation State and legal fees associated with incorporation