Term
| Sole Proprietor Characteristics |
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Definition
1) owned and operated by one person 2) smallest in size but most numerous [10 million] 3) 1/4 profitable 4) 20% survive past 5 years
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Term
| advantages of a sole proprietor |
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Definition
1) easy to start 2) easy to manage 3) keep all profits 4) no business income tax 5) personal freedom 6) ease of closure
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Term
| weaknesses of a sole proprietor |
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Definition
1) unlimited liability 2) provides all capital 3) efficiency threatened due to size 4) lacks business experience 5) difficulty attracting qualified employees 6) limited life
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Term
| partnership characteristics |
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Definition
1) owned and operated by 2 or more people 2) 1.5 million U.S. businesses 3) types
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Term
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Definition
general- all partners responsible for financial and managerial activities limited- at least one partner not active in business
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Term
| advantages of partnerships |
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Definition
1) ease of establishment 2) ease of management 3) no special taxes 4) more capital 5) more efficient 6) attracts better employees
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Term
| weaknesses of partnerships |
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Definition
1) responsible for partners debt and actions 2) limited life 3) conflict amongst partners 4) unlimited liability
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Term
| Corporation characteristics |
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Definition
1) business and ownership legally seperated 2)90% of business in the U.S. 3) obtain charter from state it intends to operate 4) stockholders are owners and investors 5) board of directors
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Term
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Definition
owners and investors divides profits (dividends) money used as capital |
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Term
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Definition
hires managers to supervise production decision making body of corporation handles sale of stock |
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Term
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Definition
1) receive dicidends 1st 2) after all debts paid, gets investment back 1st when corporation folds 3) dividends fixed
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Term
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Definition
1) dividends vary 2)dividends after preferred 3) voting power for board of directors- 1 stock 1 vote
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Term
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Definition
| loan to corporation with interest |
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Term
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Definition
| name listed with corporation, interest payment automatically sent on specified date |
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Term
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Definition
1) coupons to be presented to obtain interest payment 2) ananymity
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Term
| advantages of a corporation |
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Definition
1) ease of raising capital 2) hire best managers to run business 3) limited liability 4) unlimited life 5) ease of owner transfer
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Term
| weaknesses of a corporation |
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Definition
1) complex to start 2) share holders little say in running business 3) taxed 2x-capital gains & personal income tax 4) govt. regulations
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