Sole Proprietorship(2 pages)
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- Lecture number:
- Lecture Note
- University of Texas at Austin
- Fin 320f - Foundations of Finance
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Lecture 9 Outline of Current Lecture -Sole proprietorship -Partnership -Corporation Current Lecture Sole proprietorship Sole proprietorships are the most common form A sole proprietorship is owned by one person— the proprietor The goals of the proprietorship are as varied as the proprietors themselves Pros: Easy to create—just hang out your shingle Few regulations Taxed like an individual Cons: Unlimited personal liability Difficult to obtain capital Hard to transfer ownership; illiquid The business dies with the proprietor Partnership A partnership (also called a general partnership) is a business shared by two or more owners The goals of partnerships are as varied as those for sole proprietorships Pros (same as for sole proprietorship) Easy to create Few regulations Taxed like an individual Cons: Unlimited personal liability for partners Difficult to obtain capital Hard to transfer ownership; illiquid The business dies with the partners LP stands for Limited Partnership “Limited” partners have limited liability, but no control over the firm’s operations “General” partners have control, but unlimited liability LPs are popular for risky businesses: oil drilling, mining, real estate Corporation Corporations earn the most revenue A corporation is a separate and distinct legal entity chartered by the state What is the goal of a corporation? FIN 320F
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