Business ownership

Question 0

What is a Sole Proprietorship?

Answer 0

A business that is owned and managed by one individual who receives all the profits and bears all the losses

Question 1

What are 3 disadvantages of sole proprietorships?

Answer 1

●Unlimited liability
●Difficulty in raising financial capital
●Responsible for all losses
●Management knowledge may be limited

Question 2

Benefits of a Sole proprietorship

Answer 2

●Ease of starting and going out of business
●Control over profits and business operations
●Pride of ownership
●Lower taxes (pays no corporate income taxes)

Question 3

What is a partnership

Answer 3

A business that is owned and managed by two or more individuals who receive all the profits and bear all the losses.

Question 4

Benefits of a Partnership

Answer 4

●Easier to raise financial capital
●Partners may combine managerial skills
●Personal satisfaction
●Lower taxes (pays no corporate income taxes)

Question 5

Disadvantages of Partnership

Answer 5

●Unlimited liability
●Shared Profits
●Possible conflicts between partners
●Possible instability after the death of a partner

Question 6

What are corporations?

Answer 6

A business that is owned by stockholders and has rights and responsibilities as if it were a person.

Question 7

Benefits of a corporation

Answer 7

●Limited liability
●Greater financial capital
●Unlimited life
●Specialized management

Question 8

Disadvantages of a corporation

Answer 8

●Increased taxation (pays corporate income taxes)
●Difficulty in starting (each state has its own rules for a corporate charter
●May be larger, more bureaucratic than other forms of business
●Increased government control