why do partnership have short life span
Answers
BASIC FORMS OF BUSINESS OWNERSHIP.
LEARNING GOAL 1
Compare the advantages and disadvantages of sole proprietorships.
A. About 800,000 new businesses are started in the U.S. each year.
B. How you form your business can make a difference in your long-term success.
C. The THREE MAJOR FORMS OF BUSINESS OWNERSHIP are:
1. A SOLE PROPRIETORSHIP is a business that is owned, and usually managed, by one person; it is the most common form.
2. A PARTNERSHIP is a legal form of business with two or more owners.
3. A CORPORATION is a legal entity with authority to act and have liability separate from its owners.
D. Each form of business ownership has its advantages and its disadvantages.
Answer:
BASIC FORMS OF BUSINESS OWNERSHIP.
LEARNING GOAL 1
Compare the advantages and disadvantages of sole proprietorships.
A. About 800,000 new businesses are started in the U.S. each year.
B. How you form your business can make a difference in your long-term success.
C. The THREE MAJOR FORMS OF BUSINESS OWNERSHIP are:
1. A SOLE PROPRIETORSHIP is a business that is owned, and usually managed, by one person; it is the most common form.
2. A PARTNERSHIP is a legal form of business with two or more owners.
3. A CORPORATION is a legal entity with authority to act and have liability separate from its owners.
D. Each form of business ownership has its advantages and its disadvantages.
II. SOLE PROPRIETORSHIPS.
A. ADVANTAGES OF SOLE PROPRIETORSHIPS.
1. EASE OF STARTING AND ENDING THE BUSINESS. All you need is a permit from the local government.
2. BEING YOUR OWN BOSS. Working for yourself is exciting.
3. PRIDE OF OWNERSHIP. Sole proprietors have taken the risk and deserve the credit.
4. LEAVING A LEGACY behind for future generations.
5. RETENTION OF COMPANY PROFITS. You don=t have to share profits with anyone.
6. NO SPECIAL TAXES. Profits of the business are taxed as the personal income of the owner.
B. DISADVANTAGES OF SOLE PROPRIETORSHIPS.
1. UNLIMITED LIABILITY is the responsibility of business owners for all of the debts of the business.
2. LIMITED FINANCIAL RESOURCES. Funds available are limited to the funds that the sole owner can gather.
3. MANAGEMENT DIFFICULTIES. Many owners are not skilled at record keeping.
4. OVERWHELMING TIME COMMITMENT. The owner has no one with whom to share the burden.
5. FEW FRINGE BENEFITS. Fringe benefits can add up to 30% of a worker=s income.
6. LIMITED GROWTH.
7. LIMITED LIFE SPAN. If the sole proprietor dies or leaves, the business ends.
III. PARTNERSHIPS.
LEARNING GOAL 2
Describe the differences between general and limited partnerships, and compare the advantages and disadvantages of partnerships.
A. A partnership is a legal form of business with two or more owners.
B. TYPES OF PARTNERSHIPS.
1. A GENERAL PARTNERSHIP is a partnership in which all owners share in operating the business and in assuming liability for the business=s debts.
2. A LIMITED PARTNERSHIP is a partnership with one or more general partners and one or more limited partners.
a. A GENERAL PARTNER is an owner (partner) who has unlimited liability and is active in managing the firm.
b. A LIMITED PARTNER is an owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment.
c. LIMITED LIABILITY is the responsibility of a business’ owners for losses only up to the amount they invest; limited partners and shareholders have limited liability.