| A | B |
|---|
| sole proprietorship | A business owned by one person |
| The 3 main types of business organizations | Sole proprietorship, partnerships, and corporations |
| Advantages of owning a sole proprietorship | Easy to start, being in charge of the business, make all the decisions, and run the business as they see fit, and income taxes are usually lower than a corporations. |
| Advantages of owning a partnership | Easy to start, easier to obtain capital than a sole proprietorship, each partner contributes money to start the business, not dependent on a sole person, income is only taxed once, and each partner brings different skills and talents to the business. |
| unlimited liability | means the owner is responsible for the company's debts. |
| Partnership | A business owned by two or more people who share its risks and rewards. |
| corporation | A company that is registered by a state and operates apart form its owners. |
| limited liability | Holds a firm's owners responsible for no more than the capital that they have invested in it. |
| advantages of forming a corporation | limited liability, ability to raise money when people buy stock, and unlimited life (does not end when the owner dies) |
| cooperative | An organization that is owed and operated by its members. |
| nonprofit organization | A type of organization that focuses on providing a service, but not to make a profit. |
| franchise | A contractual agreement to use the name and sell the products or services of a company in a designated geographic area. |
| Disadvantages of owning a sole proprietorship | unlimited liability, Limited access to credit, the person in charge may not have all the skills needed to run the business, and it has limited life (It ends when the owner dies.) |
| Disadvantages of a partnership | All partners share the business risks, problems with the partners getting along, and unlimited legal and financial liability. |
| Disadvantages of a corporation | Double taxation, more regulation from the government, and difficult and costly to start. |
