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Sole Proprietorships• One person

• Advantages– Easy to start, easy out; you are your our own boss;

you retain all profit; and no special federal taxes

• Disadvantages– Limited financial resources; skill gaps; unlimited

liability; lack of fringe benefits; a limited lifespan

Types of Business Ownership

© 2009 The McGraw-Hill Companies, Inc. All rights reserved.

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McGraw-Hill

Partnerships• General partnership• Limited partnership

– General partner– Limited partner– Limited liability

• Master limited partnership (MLP)• Limited liability partnership (LLP)

Types of Business Ownership

© 2009 The McGraw-Hill Companies, Inc. All rights reserved.

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McGraw-Hill

Partnerships• Advantages:

– More financial resources and pooled knowledge

• Disadvantages– Division of profits; unlimited liability for each general

partner; conflicts among partners; difficult to get out of the relationship

Types of Business Ownership

© 2009 The McGraw-Hill Companies, Inc. All rights reserved.

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McGraw-Hill

Corporations• Corporate governance• Board of directors

C-Corporations– Owners not liable for debts

S-Corporations– Government created, taxed like sole proprietor

Limited Liability Corporations (LLCs)– Ownership rules are flexible; cannot sell stock;

more paperwork; double taxation

Types of Business Ownership