FORMS OF LEGAL OWNERSHIP

Sole Proprietorship

Partnership

Corporation

SOLE PROPRIETORSHIP

Owned and operated by one person

Easy to create

Single owner receives all profits, incurs any losses, and is liable for the debts of business

SOLE PROPRIETORSHIP Advantages:Advantages:

Easy and inexpensive to createOwner receives all profitsLeast regulated form of ownershipBusiness pays no taxes. Owner pays

personal income taxes which is a lower rate than the corporate tax rate.

SOLE PROPRIETORSHIPDisadvantages:Disadvantages:

Unlimited liabilityFull responsibility for all debtsOwners personal assets are at risk

(i.e., home, car, etc.)May have insufficient skillsUpon death, the business dissolves

PARTNERSHIPA business with two or

more owners

Partners do not have to share a business equally

How the partnership interests are divided are spelled out in the Partnership Agreement.

PARTNERSHIP

AdvantagesAdvantagesInexpensive and easy to createShare ideas, abilities, and financial

obligationsOwners pay taxes as personal

income which is taxed at lower rate.

PARTNERSHIP

DisadvantagesDisadvantagesDifficulty in dissolving partnershipPersonality conflictsPartners held liable for each other’s

actions

CORPORATIONRegistered by the state

and operates apart from its owners

A corporation lives-on after the owners die or have sold interest

Ownership is represented by shares of stock, public or private

CORPORATIONAdvantagesAdvantages

Corporations are separate legal entities from the owners

Perpetual Existence: The corporation is not dissolved upon death of owners

Shareholder’s liability is limited to amount invested However, officers may be personally liable; i.e. Enron’s late Kenneth Lay

CORPORATIONDisadvantages

Expensive to start and requires a lot of legal paperwork. Must hire attorneys.

Corporation owners are seemingly double-taxedThe business’ profits are taxed at a higher corporate rate

The owner’s income from the business (or shareholder’s dividends) is also taxed as personal income

You may use the class set of You may use the class set of magazines as well as hand magazines as well as hand

drawings, but there must be a drawings, but there must be a minimum of minimum of 88 pictures on your pictures on your

collagecollage

Each group will be assigned one of the legal forms of Each group will be assigned one of the legal forms of ownership. Using your notes and class discussion ownership. Using your notes and class discussion you will you will DEFINEDEFINE, , LISTLIST advantages and advantages and disadvantages and disadvantages and CREATE a COLLAGECREATE a COLLAGE illustrating illustrating your form of ownership.your form of ownership.

BUSINESS STRUCTURE PROJECT50 POINTS

RUBRICRUBRIC

Overall Creativity

Definition

Advantages and Disadvantages

Collage

10

10

15

15