Identify the usual forms of a business entity and describe the ownership characteristic of each
Identify the usual forms of a business entity and describe the ownership characteristic of each
Homework Answers
Usual forms of business entity
1) Sole Proprietorship
- One owner who is responsible for the business.
-It is not a legal entity that seperate the owner from business
-Owner is responsible for all debts and obligation of the business on personal level.
2) Partnership
-Where two or more people act as co-owners.
two types of partnership
1:GENERAL PARTNERSHIP
-All owners of the business have an unlimited liability in the business
2:LIMITED PARTNERSHIP
-At least one of the partners has a limited liability, meaning that they are not personally responsible for the debts of business.
ccountatnt
3)corporations
-It i a form of legal entity separate from its owners.
- This creates a limited liability for all owners, but results in a double taxation on profts
4)Limited Liability Company
-A form of business ownership that is taxed like a partnership but enjoys the benefit of a limited liability like a corporation is a "Limited Liability Company"
-Usually reserved for a group of professionals such as accountants, doctors and lawyers
5) S Corporation
-It is a type of business ownership that allows its owners to avoid double taxation because the organization is not required to pay corporate taxes.
-All profit and losses are passed on to owners of the organization to report on their personal income tax.
6) Franchise
-This form of ownership allows a franchisee to borrow the franchisor's business model and brand for a specified period.
-Franchise owners also have limited control over their suppliers they can purchase from, are forced to contribute to a marketing fund they have little control over.
7)Co-operative
-Co-operative are organizations that are owned and controlled by an association of members.
-This form of ownership allows for a more democratic approach to control where each share is worth the same amount of votes, similar to a corporation with common stock.
-It also offers limited liability to its owners and equal profit distribution based on ownership percentage.
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Identify the usual forms of a business entity and describe the
ownership characteristic of each
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