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Forms of Business Entities
This deck covers various forms of business entities, including their characteristics, advantages, and disadvantages.
What is a sole proprietorship?
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Key Terms
Term
Definition
What is a sole proprietorship?
A sole proprietorship is a business owned and operated by one person, with no legal distinction between the owner and the business.
What are the advantages of a partnership?
Advantages of a partnership include shared responsibility, pooled resources, and combined expertise.
Define a corporation.
A corporation is a legal entity that is separate from its owners, offering limited liability to its shareholders.
What is limited liability?
Limited liability means that the owners are not personally responsible for the company's debts or liabilities.
What is a key disadvantage of a sole proprietorship?
A key disadvantage is unlimited liability, where the owner is personally liable for all business debts.
How does a limited liability company (LLC) differ from a corporation?
An LLC offers limited liability like a corporation but with more flexible management and fewer formalities.
Related Flashcard Decks
| Term | Definition |
|---|---|
What is a sole proprietorship? | A sole proprietorship is a business owned and operated by one person, with no legal distinction between the owner and the business. |
What are the advantages of a partnership? | Advantages of a partnership include shared responsibility, pooled resources, and combined expertise. |
Define a corporation. | A corporation is a legal entity that is separate from its owners, offering limited liability to its shareholders. |
What is limited liability? | Limited liability means that the owners are not personally responsible for the company's debts or liabilities. |
What is a key disadvantage of a sole proprietorship? | A key disadvantage is unlimited liability, where the owner is personally liable for all business debts. |
How does a limited liability company (LLC) differ from a corporation? | An LLC offers limited liability like a corporation but with more flexible management and fewer formalities. |
What is a partnership agreement? | A partnership agreement is a contract between partners outlining the terms and conditions of the partnership. |
What is double taxation in the context of corporations? | Double taxation refers to corporate profits being taxed at the company level and again as shareholder dividends. |
What is a benefit of forming a corporation? | A benefit is the ability to raise capital through the sale of stock. |
What is a general partnership? | A general partnership is a business arrangement where two or more individuals share ownership and responsibility. |