What are the characteristics of sole proprietorships? |
Ownership, liability, tax liability, risk, and considerations |
What are the advantages and disadvantages of a sole proprietorship? |
Advantages: Easy start-up, relatively few regulation, and get all profits Disadvantages: Unlimited personal liability, limited access to resources, and lack of performance |
Compare and contrast the different types of partnerships |
General partnership: All partners have responsibility and all partners have liability Limited partnership: 1 partner has responsibility and only 1 partner has liability Limited liability partnership: All partners have responsibility and all partners have liability |
What are the advantages and disadvantages of partnerships? |
Advantages: Ease of start-up, shared decision making, more capital, and attractive to employees Disadvantages: Unlimited liability, lack of control, potential for conflict, and lack of performance |
How does a business franchise operate? |
It pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area |
What are the characteristics of a corporation? |
Unlimited life, limited liability, separate legal entity, relative ease of transferring ownership rights, professional management, ease of capital acquisition, and government regulations |
What are the advantages and disadvantages of incorporation? |
Advantages: Limited liability for owners, transferable ownership, ability to attract capital, and long life Disadvantages: Difficult and expense of start-up, double taxation, loss of control, and more regulation |
Compare and contrast corporate combinations |
Horizontal mergers: Join two or more firms competing in the same market with the same good or service Vertical mergers: Join two or more firms involved in different stages of producing the same good or service Conglomerates: No one in the business earns the majority of the firm’s profits |
What is the role of multinational corporations? |
They produce and sell their goods and services in more than one country |
What are the different types of cooperative organizations? |
Consumer cooperatives, service cooperatives, and producer cooperatives |
What is the purpose of nonprofit organization (including professional and business organizations)? |
To benefit the public |
Sole proprietorship |
A business owned and managed by a single individual |
Partnership |
A business owned by two or more persons associated as partners |
General partnership |
A partnership in which each member has an equal right to manage the business and share in the profits, as well as an equal responsibility for debts |
Limited partnership |
A partnership in which only certain partners have personal liability |
Limited liability partnership |
All partners are limited partners and not responsible for the debts and other liabilities of other partners |
Corporation |
A business owned by stockholders who share in its profits but are not personally responsible for its debts |
Cooperative |
A business organization owned and operated by a group of individuals for their mutual benefit |
Nonprofit organization |
An organization whose goals do not include making a personal profit for its owners or organizers |
Professional organization |
A nonprofit organization that works to improve the image, working conditions, and skill levels of people in particular occupations |
Chapter 8 – Sole Proprietorships
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