Chapter 1 Flashcards
What are most common types of business structures
Sole proprietorship, partnership, joint venture or corporation
What is sole proprietorship
You have absolute authority over all business decisions
Advantages of sole proprietorship
-Easy to create
-Total control by owner
-Ownership freely transferable
-Owner can sell/alter or exchange all or part of business
Disadvantages of sole proprietorship
-owner has unlimited personal liability
-Business is terminated upon death of the owner
-personal credit fines property must be used as security for loans
-Business profits are taxed as ordinary income to the owner
-Friends generally tax deductible
What is a partnership
According to the Florida uniform, partnership act partnership is defined as two or more persons associating themselves as CO-OWNERS for the purpose of carrying on business for profit.
The existence of a partnership depends on what
 Partnership agreement
What is the partnership agreement?
Constitutes the partnerships relationship
What are some things the partnership agreement should include
-The type of business
-General duties of both partners
-Limitations
-Duration of partnership
-Amount invested in business
-Human life insurance
-Settlement in case of death or incapacitation
-provisions of the withdrawal, additional partners, dissolving
What are the two types of partnerships with recognized in Florida?
General partnership and limited partnership
What is general partnership?
-Any association of two or more persons, operating for profit.
- And are personally liable and co-owners of the business
What is limited partnership? Limited partner ?
- entity comprised of at least one general partner, in addition has one or more limited partners.
-A limited partner is a generally a passive investor and is immune from liability and debt beyond amount invested
Who has control in a partnership
Control is shared with businesses partners as in the partnership agreement
Advantages of a Partnership
- increased ability to raise capital
- pooling of financial resources and individual talents
- sharing responsibilities and ideas
Minimal administrative cost
What is a joint venture
A special combination of two or more persons or entities jointly seeking profit in some specific venture WITHOUT AN ACTUAL PARTNERSHIP OR CORPORATE DESIGNATION
What is a primary difference between a partnership and joint venture
A partnership is usually created for the general transaction of business of a particular type A joint venture is usually limited to a single transaction
