This chapter examines three primary forms of business ownership sole proprietorship, partnership, and corporation and weighs the advantages and disadvantages of each. These forms are the most often used whether the business is a traditional bricks and mortar company, an online-only one, or a combination of both. We also take a look at S corporations, limited liability companies, and cooperatives and discuss some trends in business ownership. | Chapter Five Options for Organizing Business Sole Proprietorship A business owned and operated by one individual. 5-1 Advantages and Disadvantages of Sole Proprietorship Advantages Ease and cost of formation Secrecy Distribution and use of profits Control of the business Government regulation Taxation Closing the business Disadvantages Unlimited liability Limited sources of funds Limited skills Lack of continuity Lack of qualified employees Taxation 5-2 Partnership An association of two or more persons who carry on as co-owners of a business for profit. 5-3 The Difference between General and Limited Partners General partner A person who assumes full co-ownership of a business Limited partner A person who contributes capital to a business but is not active in managing it 5-4 Advantages and Disadvantages of Partnerships Advantages Ease of organization Availability of capital and credit Combined knowledge and skills Decision making Regulatory controls Disadvantages Unlimited liability . | Chapter Five Options for Organizing Business Sole Proprietorship A business owned and operated by one individual. 5-1 Advantages and Disadvantages of Sole Proprietorship Advantages Ease and cost of formation Secrecy Distribution and use of profits Control of the business Government regulation Taxation Closing the business Disadvantages Unlimited liability Limited sources of funds Limited skills Lack of continuity Lack of qualified employees Taxation 5-2 Partnership An association of two or more persons who carry on as co-owners of a business for profit. 5-3 The Difference between General and Limited Partners General partner A person who assumes full co-ownership of a business Limited partner A person who contributes capital to a business but is not active in managing it 5-4 Advantages and Disadvantages of Partnerships Advantages Ease of organization Availability of capital and credit Combined knowledge and skills Decision making Regulatory controls Disadvantages Unlimited liability Business responsibility Life of the partnership Distributions of profits Limited sources of funds Taxation 5-5 Corporation A legal entity created by the state, whose assets and liabilities are separate from its owners. 5-6 Board of Directors Shareholders Types of Corporations Private Corporation owned by only one person or a few people closely involved in its management. Public Corporation whose stock anyone may buy, sell, or trade. Subsidiary Corporation in which the majority of the stock is owned by another corporation known as the parent company 5-7a Types of Corporations Holding Corporation that controls one or more companies through ownership of their common stock. Crown Corporations owned and operated by a federal, provincial, or local government. Non-profit Corporation that focuses on providing service rather than earning a profit. 5-7b Advantages and Disadvantages of Corporations Advantages Limited liability Transfer of ownership Perpetual life External sources of funds Expansion
