UConn BLAW 3175 - PPT chapter 21 (business organizations)(2) (23 pages)

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1 14 19 Dr Gerlinde Berger Walliser BUSINESS ORGANIZATIONS Chapter 21 22 1 Quote of the Day Control everything own nothing John D Rockefeller CORPORATION n An ingenious device for obtaining individual profit without individual responsibility Ambrose Bierce in The Devil s Dictionary Starting a Business Limited number of legal business forms available Trade off between Owner s interests Creditors investors interests Customers and suppliers interests The public s government s interests Choice depends on management objectives legal limitations and taxation Basic Business Forms Choice Depends on Ease of formation Financial resources available and Financial resources needed Level of risk and risk tolerance liability Availability of business partners Control Transferability Taxation Sole proprietorship A sole proprietorship is an unincorporated business owned and operated by one natural person May hire employees but may not be owned by multiple people No legal entity If sole proprietorship is sued the owner is sued Single taxation Sole proprietorship Advantages Disadvantages Easy to form hang out a Difficult to raise money shingle No capital needed Owner has full and complete right to manage full and solitary control of the business Single taxation no business partners shareholders investors only bank loans Owner personal liable for all business debts and for torts of employees Lasts the lifetime of the owner not transferable General Partnership An association of 2 or more natural or legal persons to carry on as co owners a business for profit Easy to form no formalities no capital needed May be formed by circumstances General Partnership Raises money through debt or new partners Shared management Shared profits Shares need not to be equal see Partnership agreement Taxation Partners are individually taxed on their income General Partnership Liability All partners jointly liable to third parties for contracts entered into with authority express implied or apparent for torts