Partnerships

A partnership is a business owned by two or more people. Its advantages and disadvantages are very similar to the sole-proprietorship.  Two forms of partnership exist. In the most common form, the general partnership, all partners are responsible for financial obligations and management of the business. In a limited partnership, while having contributed to funds to finance the business, at least one partner is not active in the daily running of the business.

Some advantages of a partnership include:

• ease of start-up
• no special taxes on a partnership
• easier to raise capital through bank loans or new partner

Some disadvantages of a partnership include:

• partners are responsible for the acts of each other, except in a limited partnership where the limits are spelled out
• limited life (partnerships ends if a partner leaves)
• potential for partner conflicts

Objectives:

• Describe the characteristics of a partnership
• Explain some of the advantages and disadvantages of a partnership

Here is a link to a resource that explains how to avoid partnership problems.

Homework: Read ch. 3-3 and don’t forget the initiative essay is due Monday the 26th.

Business Organization

If you’ve ever sold lemonade or provided yard care for money, you’ve been an entrepreneur.  If you had a partner, how was the money and work divided?

There are three major forms of business organization:

• sole-proprietorship
• partnership
• corporation

Each form of business organization has its advantages and disadvantages. In today’s class, we examined the sole-proprietorship.

Objectives:

• Describe the characteristics of the sole-proprietorship
• Undestand the advantages and disadvantages of sole-proprietorships

Sole-proprietorships are businesses run by one person. While the smallest type of business organization in size, they are the most numerous. Advantages of the sole-proprietorship include:

• easy to start
• owner controls all profit
• owner is main decision maker
• taxes apply to personal income tax (no business tax)

Disadvantages include:

• unlimited liablity
• business has limited life
• more difficult to raise financial capital
• more difficult to attract highly qualified personnel

Here’s a quick overview regarding sole-proprietorships. An overview of legal liability for sole-proprietorships.

Homework: Choose one initiative from yesterday’s exercise. Decide either to support or oppose it. Construct a four (or more) paragraph essay defending your position. (Due Monday the 26th)