Lesson 1

• Sole Proprietorship


  • Typically the smallest businesses, run and operated by a single person
  • No legal distinction between the business and the owner
  • Owner has unlimited liability
• Unlimited liability


  Owner is responsible for any debts, lawsuits, or taxes that affect the business
• Unlimited Liability Example


  • Ryan owns a restaurant that went bankrupt. Because he has unlimited liability, he has to bear the responsibility of any debt
• Sole Proprietorship


  • Owner makes all management decisions
  • High level of privacy as they only need to share financial records with tax authorities
  • Easy and inexpensive to register with the government
  • Only has limited funding since it is only the sole owner who is raising the money needed to start the business
• Partnerships


  • Similar to a sole proprietorship, but is run by multiple owners
  • The business itself is its own legal entity
  • The level of liability that owners have is dependent on the type of partnership
• General partnerships


  Business owners have unlimited liability to the firm
• Limited partnerships


  Business owners are only liable up to the extent that they contributed
• Types of partners


  • Industrial Partners - contributes personal service to the partnership
  • Capitalist Partners - provides money or property
• Liability of partners


  • General Partners - have unlimited liability
  • Capitalist Partners - liability only extends to their contributions
• Involvement of partners


  • Silent Partners - does not actively participate in operations
  • Managing Partners - involved in day to day operations
• Corporation


  • The largest of the business organizations
  • Has a large number of owners who consist of the shareholders
  • Shareholders have limited liability
  • A corporation is its own legal entity, so shareholders are under no obligation to shoulder lawsuits or debts
  • Less privacy as they are expected to make their financial records public to aid the decisions of potential investors
• Establishing a corporation


  1. Almost the same as establishing a partnership

  2. An additional document needed is the articles of incorporation
• Cooperatives


  An association of individuals who work together to pursue their social, cultural, and economic needs
• Assets


  • Items that a company owns that are of value
  • Can be financial, tangible, or intangible goods
• Public-Private Partnerships (PPP)


  • Contractual agreements between the government (public) and businesses (private) that involve the execution, planning, financing or operation of a specific venture
  • Partnerships between the government and private firms served as a middle-ground
  • Provided social services to the people while also providing profit for private firms
• Sole Proprietorship


  A type of business where the owner has complete control over all management decisions, but is personally responsible for all of the business's debts and liabilities.
• Limited Liability Company (LLC)


  A type of business structure that provides personal liability protection for its owners, known as members, and can raise more funds than a Sole Proprietorship due to its ability to have multiple members who can invest money into the business.
• Personal Liability Protection


  A feature of an LLC that protects the members' personal assets from the business's debts and liabilities, while a Sole Proprietorship offers no personal liability protection for the owner.