a business that is owned (and usually operated) by one person.
Advantages of Sole Proprietorships
1 Ease of start-up and closure
2 Pride of ownership
3 Retention of all profits
4 Flexibility of being your own boss
5 No special taxes
Disadvantages of Sole Proprietorships
1 Unlimited liability
2 Lack of continuity
3 Lack of money
4 Limited management skills
5 Difficulty in hiring employees
a legal concept that holds a business owner personally responsible for all the debts of the business.
a voluntary association of two or more persons to act as co-owners of a business for profit.
Types of Parterners
a person who assumes full or shared responsibility for operating a business.
a business co-owned by two or more general partners who are liable for everything the business does.
a person who contributes capital to a business but has no management responsibility or liability for losses beyond the amount he or she invested in the partnership.
a business co-owned by one or more general partners who manage the business and limited partners who invest money in it.
Master Limited Partnership (MLP)
a business partnership that is owned and managed like a corporation but often taxed like a partnership.
Articles of Partnership
are an agreement listing and explaining the terms of the partnership.
Advantages of Partnerships
1 Ease of setup
2 Availability of capital and credit
3 Personal interest
4 Combined business skills and knowledge
5 Retention of profits
6 No special taxes
Disadvantages of Partnerships
1 Unlimited liability
2 Management disagreements
3 Lack of continuity
4 Frozen investment
an artificial person created by law with most of the legal rights of a real person, including the rights to start and operate a business, to buy or sell property, to borrow money, to sue or be sued, and to enter into binding contracts.
the shares of ownership of a corporation.
a person who owns a corporation's stock.
a corporation whose stock is owned by relatively few people and is not sold to the general public.
a corporation whose stock can be bought and sold by an individual.
a corporation in the state in which it is incorporated.
a corporation in any state in which it does business except the one in which it is incorporated.
a corporation chartered by a foreign government and conducting business in the United States.
stocked owned by individuals or firms who may vote corporate matters but whose claims on profit and assets are subordinate to the claims of others.
stocked owned by individuals or firms who usually do not have voting rights but whose claims on dividends are paid before those of common-stock owners.
a distribution of earnings to the stockholders of a corporation.
a legal form listing issues to be decided at a stockholders' meeting and enabling stockholders to transfer their voting rights to some other individual (s).
Board of Directors
the top governing body of a corporation, the members of which are elected by the stockholders.
the chairman of the board, president, executive vice president, corporate secretary, treasurer, and any other top executive appointed by the board of directors.
a feature of corporate ownership that limits each owner's financial liability to teh amount of money that he or she has paid for the corporation's stock.
Advantages of Corporations
1 Limited liability
2 Ease of raising capital
3 Ease of transfer of ownership
4 Perpetual life
5 Specialized management
Disadvantages of Corporations
1 Difficulty and expense of formation
2 Government regulation and increase paperwork
3 Conflict within the corporation
4 Double taxation
5 Lack of secrecy
Special Types of Business Ownership
2 Limited-liability Companies
3 Government-owned Corporations
4 Not-for-Profit Corporations
a corporation that is taxed as though it were a partnership
Limited-Liability Company (LLC)
a form of business ownership that combines the benefits of corporations and a partnership while avoiding some of the restrictions and disadvantages of those forms of ownership.
a corporation owned and operated by a local, state, or federal government.
a corporation organized to provide a social, educational, religious, or other service rather than to earn a profit.
an association of individuals or firms whose purpose is to perform some business function for its members.
an agreement between two or more groups to form a business entity in order to achieve a specific goal or to operate for a specific period of time.
a temporary association of individuals or firms organized to perform a specific task that requires a large amount of capital.
the purchase of one corporation by another
a situation in which the management and board of directors of a firm targeted for acquisition disapprove of the merger.
an offer to purchase the stock of a firm targeted for acquisition at a price just high enough to tempt stockholders to sell their shares.
a technique used to gather enough stockholder votes to control a targeted company.
Leveraged Buyout (LBO)
a purchase arrangement that allows a firm's managers and employees or a group of investors to purchase the company.