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Lecture Business law: The ethical, global, and e-commerce environment (13/e): Chapter 37 - Mallor, Barnes, Bowers, Langvardt
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Lecture Business law: The ethical, global, and e-commerce environment (13/e): Chapter 37 - Mallor, Barnes, Bowers, Langvardt
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In this chapter you will: Choose an appropriate form of business for a particular enterprise and list characteristics of each form; describe creation and risks of being a partner or purported partner; identify partnership capital, property, and interests. | Partnerships Introduction to Forms of Business and Formation of Partnerships Operation of Partnerships Dissolution & Winding Up Limited Liability Companies & Limited Partnerships 9 McGraw-Hill/Irwin Business Law, 13/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved. INTRODUCTION TO FORMS OF BUSINESS AND FORMATION OF PARTNERSHIPS P A E T R H C 37 “It sounds boring, but anything is easy to start – starting a novel, starting a business – it’s keeping the thing going that is difficult.” Prue Leith, author and executive, quoted in The Adventure Capitalists (Grout and Curry, 1998) Learning Objectives Choosing a form of business Creation of partnership Purported partners Partnership capital and property Partnership interests 37 - Choosing a form of business is important since business owner’s liability and control vary among the many forms of business Overview 37 - Sole proprietorship Partnership Corporation Limited Liability Company Refer students to page 897 of the text | Partnerships Introduction to Forms of Business and Formation of Partnerships Operation of Partnerships Dissolution & Winding Up Limited Liability Companies & Limited Partnerships 9 McGraw-Hill/Irwin Business Law, 13/e © 2007 The McGraw-Hill Companies, Inc. All rights reserved. INTRODUCTION TO FORMS OF BUSINESS AND FORMATION OF PARTNERSHIPS P A E T R H C 37 “It sounds boring, but anything is easy to start – starting a novel, starting a business – it’s keeping the thing going that is difficult.” Prue Leith, author and executive, quoted in The Adventure Capitalists (Grout and Curry, 1998) Learning Objectives Choosing a form of business Creation of partnership Purported partners Partnership capital and property Partnership interests 37 - Choosing a form of business is important since business owner’s liability and control vary among the many forms of business Overview 37 - Sole proprietorship Partnership Corporation Limited Liability Company Refer students to page 897 of the text for a summary chart of business forms and details. A sole proprietorship has only one owner and is an extension of its owner It is not a legal entity and cannot sue or be sued, so creditors/claimants sue the owner Advantages: no formalities, taxes flow to owner, owner takes all profit and control Disadvantage: owner bears all risk of loss Sole Proprietorship 37 - A corporation is owned by shareholders who do not necessarily manage the business Corporation is a legal and tax-paying entity Advantages: limited liability for shareholders for corporate obligations, perpetual existence Disadvantages: more formality and more complex structure, double-taxation Corporation 37 - Exception to status as federal tax-paying entity is a Subchapter S corporation that is taxed as a partnership or sole proprietorship Advantages: shareholders enjoy limited liability for corporate obligations, perpetual existence, ability to raise large amounts of capital Disadvantages: greater formality required
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