Business Forms

Question 1

What are three forms of businesses?

Answer 1

Sole Proprietorship
Partnership
Corporation

Question 2

Describe a Sole Proprietorship

Answer 2

Typically small local businesses
Simple to setup
Owner has 100% control over business
Owner is personally responsible for debt of the business (Unlimited Liability)

Question 3

Describe a Partnership

Answer 3

Jointly owned by 2 or more individuals
Partnership entity does not pay taxes, the individual owners do
Must have at least one “General Partner” who has unlimited liability (responsible for debt of the business) but may also have “Limited liability partners” limited only to what they’ve invested

Question 4

Describe a Corporation

Answer 4

Organized under laws of a particular state
Owned by 1 or more persons called stockholders
Very complex to setup
Taxed twice (income and corporate tax)