Chapter 5 Bus3-10

Sole Proprietorship

Answer explanation

a business owned, and usually managed, by one person. 72%

Partnership

Answer explanation

Two or more people legally agree to become co-owners of a business. 8%

Corporation

Answer explanation

A legal entity with authority to act and have liability apart from its owners. 20%

Benefits of Sole proprietorship

Answer explanation

1) Ease of starting and ending the business 2) Being your own boss 3) Pride of ownership 4) Leaving a legacy 5) Retention of company profit 6) No special taxes

what are the DISADVANTAGES of SOLE PROPRIETORSHIPS

Answer explanation

1) Unlimited Liability anything else. 2) Limited financial resources 3) Management difficulties 4) Overwhelming time commitment 5) Few fringe benefits 6) Limited growth 7) Limited life span

Unlimited Liability

Answer explanation

any debts or damages incurred by the business are your debts, even if it means selling your home, car or anything else.

General Partnership

Answer explanation

All owners share in operating the business and in assuming liability for the business's debts.

General Partner

Answer explanation

An owner (partner) who has unlimited liability and is active in managing the firm.

Limited Partner

Answer explanation

An owner who invests money in the business, but enjoys limited liability. Limited Liability means that liability for the debts of the business is limited to the amount the limited partner puts into the company; personal assets are not at risk.

Master Limited Partnership

Answer explanation

A partnership that looks much like a corporation, but is taxed like a partnership and thus avoids the corporate income tax.