25.1
Sole proprietorships and partnerships are the simple legal structure for a business.
A. Sole proprietorships are businesses owned by one person who:
1. May be the only employee
2. Receives all profits
3. Suffers all losses and bears all risk personally
4. Is personally liable for debts and lawsuits.
B. Partnership businesses have two or more owners who:
1. Combine their talents and support each other
2. May be the only employees
3. Share all profits
4. Together suffer all losses and bear all risk personally
Sole proprietorships and partnerships are the simple legal structure for a business.
A. Sole proprietorships are businesses owned by one person who:
1. May be the only employee
2. Receives all profits
3. Suffers all losses and bears all risk personally
4. Is personally liable for debts and lawsuits.
B. Partnership businesses have two or more owners who:
1. Combine their talents and support each other
2. May be the only employees
3. Share all profits
4. Together suffer all losses and bear all risk personally
25.4
Sole Proprietorship and partnerships have advantages and disadvantages.
A. Sole Proprietorship:
Sole Proprietorship and partnerships have advantages and disadvantages.
A. Sole Proprietorship:
Advantages: 1. Easy to start 2. Owner pays only personal 3. Fewer government regulations 4. Owner makes independent decisions 5. Owner keeps all profits | Disadvantages: 1. Difficult to finance or expand 2. Long Hours 3. Unlimited Personal Liability 4. No support 5. No one to share risk |
B. Partnership:
Advantages: 1. Partners can pool resources 2. Risk, liability and work are shared 3. Skills and contacts are expanded | Disadvantages: 1. Profits must be shared 2. Partners are liable for each others' actions 3. Disagreement can end the business 4. Dissolving the business can be difficult. |