Ch 5 How to form a Business

Sole Proprietorship

A business owned, and usually managed, by one person.

Corporation

A legal entity with authority to act and have liability apart from its owners.

Limited Partnership

A partnership with one or more general partners and one or more limited partners.

Conventional (C) Corporation

A state-chartered legal entity with authority to act and have liability separate from its owners (its stockholders).

S Corporation

A unique government creation that looks like a corporation, but is taxed like sole proprietorships and partnerships.

General Partnership

All owners share in operating the business and in assuming liability for the business's debts.

Franchise Agreement

An arrangement whereby someone with a good idea for a business (franchisor) sells the rights to use the business name and sell a product or service (franchise) to others (franchisees) in a given territory.

Unlimited Liability

Any debts or damages incurred by the business are your debts, even if it means selling your home, car or anything else.

Cooperatives

Businesses owned and controlled by the people who use them- producers, consumers, or workers with similar needs who pool their resources for mutual gain.

Limited Liability Partnership

Limits partners' risk of losing their personal assets to the outcomes of only their own acts and omissions and those of people under their supervision.

Limited Liability Company (LLC)

Similar to an S corporation, but without the eligibility requirements.

Partnership

Two or more people legally agree to become co-owners of a business.