1. CHAPTER 5
1A) Explain what a sole proprietorship is?
1B) State & summarize the advantages.
1C) State & summarize the disadvantages.
2A) Explain what a partnership it.
2B) State & summarize the advantages.
2C) State & summarize the disadvantages.
3A) Explain what a corporation is.
3B) State & summarize the advantages.
3C) State & summarize the disadvantages.

2. SOLE PROPRIETORSHIP
-”A BUSINESS OWNED & MANAGED BY ONE INDIVIDUAL.”
-ACCOUNT FOR 72% OF ALL BUSINESSES IN THE US.
-THE OWNER HAS “UNLIMITED PERSONAL LIABILITY.”
-ALL PROFITS & DEBTS ACCRUE TO THE OWNER.
BILL HERLICKA

3. ADVANTAGES/DISADVANTAGES
ADVANTAGES:
4)SIMPLE TO CREATE
5)LEAST COSTLY FORM OF OWNERSHIP
6)LEAST REGULATED FORM OF OWNERSHIP
7)PROFIT INCENTIVE
8)TOTAL DECISION-MAKING AUTHORITY
9)EASY TO DISCONTINUE
DISADVANTAGES:
12)UNLIMITED PERSONAL LIABILITY
13)LIMITED SKILLS & CAPABILITIES
14)FEELINGS OF ISOLATION
15)LIMITED ACCESS TO CAPITAL
16)LACK OF CONTINUITY

4. PARTNERSHIP
-”AN ASSOCIATION OF 2 OR MORE PEOPLE WHO CO-OWN A BUSINESS FOR
THE PURPOSE OF MAKING A PROFIT.”
-CO-OWNERS (PARTNERS) SHARE THE BUSINESS’S ASSETS, LIABILITIES, &
PROFITS.
-PARTNERSHIP AGREEMENT
-”A DOCUMENT THAT STATES IN WRITING THE TERMS UNDER WHICH THE
PARTNERS AGREE TO OPERATE THE PARTNERSHIP, & PROTECTS EACH
PARTNER’S INTEREST IN THE BUSINESS.”
SAM & MARIAH CALAGIONE

5. ADVANTAGES/DISADVANTAGES
ADVANTAGES:
5)EASY TO ESTABLISH
6)COMPLEMENTARY SKILLS
7)DIVISION OF PROFITS
8)LARGER POOL OF CAPITAL
9)ABILITY TO ATTRACT LIMITED PARTNERS
10)LITTLE GOVERNMENT REGULATION
11)FLEXIBILITY
12)TAXATION
DISADVANTAGES:
15)UNLIMITED LIABILITY OF AT LEAST ONE PARTNER
16)CAPITAL ACCUMULATION
17)DIFFICULTY IN DISPOSING OF PARTNERSHIP INTEREST
18)LACK OF CONTINUITY
19)POTENTIAL FOR PERSONALITY & AUTHORITY CONFLICTS
20)PARTNERS ARE BOUND BY THE LAW OF AGENCY

6. CORPORATION
-”A SEPARATE LEGAL ENTITY APART FROM ITS OWNERS WHICH
RECEIVES THE RIGHT TO EXIST FROM THE STATE IN WHICH IT IS
INCORPORATED.”
-A GROUP OF INDIVIDUALS WORKING TOGETHER TO SERVE A
VARIETY OF OBJECTIVES.
-THE MAIN OBJECTIVE IS TO EARN LARGE, GROWING, SUSTAINED,
LEGAL RETURNS ($$$) FOR THE PEOPLE WHO OWN THE BUSINESS.

7. ADVANTAGES/DISADVANTAGES
ADVANTAGES:
5)LIMITED LIABILITY OF STOCKHOLDERS
6)ABAILITY TO ATTRACT CAPITAL
7)ABILITY TO CONTINUE INDEFINITELY (PERPETUAL LIFETIME)
8)TRANSFERABLE OWNERSHIP
DISADVANTAGES:
11)COST & TIME TO ESTABLISH & MAINTAIN
12)DOUBLE TAXATION
13)POTENTIAL FOR DIMINISHED MANAGERIAL INCENTIVES
14)LEGAL REQUIREMENTS & REGULATORY RED TAPE
15)POTENTIAL LOSS OF CONTROL BY THE FOUNDER(S)