FORMS OF SMALL

BUSINESS OWNERSHIP
1.SOLE PROPRIETORSHIP
 Advantages of Sole Proprietorship

•Ease and Cost of Formation

Advantages of Sole Proprietorship

•Secrecy
 Advantages of Sole Proprietorship

•Distribution and Use of Profits

Advantages of Sole Proprietorship

•Control of the Business

Advantages of Sole Proprietorship

•Government Regulation
Advantages of Sole Proprietorship

•Taxation
Advantages of Sole Proprietorship

•Closing the Business

 Disadvantages of Sole Proprietorship

Owner’s Lack of Ability and

Experience
 Disadvantages of Sole Proprietorship

Difficulty in Attracting Good

Employees
Disadvantages of Sole Proprietorship

Difficulty in Raising
More Capital
Disadvantages of Sole Proprietorship

Limited Life of the Firm

Disadvantages of Sole Proprietorship

Unlimited Liability of the

Proprietor
2. PARTNERSHIP
Advantages of Partnerships

Ease of Formation
 Advantages of Partnerships

Pooling of Knowledge
and Skills
 Advantages of Partnerships

More sources of Capital

 Advantages of Partnerships

More sources of Capital

 Advantages of Partnerships

Ability to Attract and

Retain Employees
Advantages of Partnerships

Tax Advantage
Disadvantages of Partnerships

Unlimited Liability
Disadvantages of Partnerships

Limited Life
Disadvantages of Partnerships

Potential Conflict
Between Partners
 Disadvantages of Partnerships

Difficulty in Dissolving
the Business
 Types of Partnerships

1. General Partnership
2. Limited Partnership
 Partnership Agreements
1. The purpose of the business;
2. The terms of partnership;
3. The goals of the partners and the partnership;
4. The financial contribution made by each partner at the beginning and during the lifetime of the
business;
5. The distribution of profits and losses;
6. The withdrawal of contributed assets or capital by a partner;
7. The management powers and work responsibilities of each partner;
8. The provisions for admitting new partners;
9. The provisions for expelling a partner;
10.The provision for continuing the business in the events of a partner’s death, illness, disability;
or withdrawal;
11.The provision for determining the value of a departing partner’s interest and method of
payment of that interest;
12.The methods of settling disputes through mediation or arbitration; and
13.The duration of the agreement and the terms of dissolution of the business.
3. CORPORATION
Advantages of Corporation

Limited Liability
Advantages of Corporation

Ease of Expansion
Advantages of Corporation

Ease of Transferring
Ownership
 Advantages of Corporation

Relatively Long Life

 Advantages of Corporation

Greater Ability to Hire

Specialized Management
 Disadvantages of Corporation

More Expensive and

Complicated to Organize
Disadvantages of Corporation

Double Taxation
 Disadvantages of Corporation

More Extensive Government

Restrictions and Reporting
Requirements
 Disadvantages of Corporation

Employees Lack Personal

Identification and Commitment
THANK YOU! 