Chapter

Forms Of Ownership
Of Small Business
Business Factors
Primary Legal Forms
Advantages & Disadvantages

Other Legal Forms

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 Right Legal Form:
Business Factors To Consider
Business Size
Nature
Desired Control
Business Vulnerability
Tax Implications
Expected Profit (Loss)
Earnings Re-investment
Personal Cash Needs

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 Forms Of Ownership
Sole Proprietorship
Partnership
Corporation
 C corporation
 S corporation

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 Sole Proprietorship

A business organization which

is controlled and managed by
the single person.

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 Advantages/Disadvantages
Of Sole Proprietorship

Insert
Figure 3.2

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 Partnership
When two or more than two
persons join together for the
earning of profit.

Partnership Act, 1932

Limited Liability Partnership
Act, 2017

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 Advantages/Disadvantages
Of Partnership

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 Types Of Partnerships
Partners Liable For
Each Others’ Actions

Manage With
Unlimited Liability

Liability = Capital
Contribution

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 Corporation
A corporation is a business formed
and owned by a group of people,
called stockholders, given special
rights, privileges, and limited
liabilities by law.

Companies Act, 2017

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 Advantages/Disadvantages
Of Corporation

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 Corporate Governance
Stockholders
Elects

Board Of
Directors
Appoints

Corporate
Officers
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 S Corporation

An S corporation is a special type of

corporation that is exempt from
multiple taxation and excessive
paperwork.

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 S Corporation

Exempt From Multiple Taxation

Less Than 75 Stockholders TAXES
One Class Of Stock
No Corporations/Partnerships Can Be
Stockholders
Stockholders= U.S. Citizens Or
Permanent Residents

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 Other
Other Legal
Legal
Forms
FormsOf
Of Ownership
Ownership
Limited Liability Companies
Since 1977
Benefits:
Limited Liability
Taxed As Partnership
Similar To S Corporation
Owners = Members
Lifespan- Determined At Organization

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 Other Legal
Forms Of Ownership
Limited Liability Partnership
 ProtectsIndividual Partners
 Not Recognized By Every State
Family Limited Liability Partnership
 Partners Related
 Agriculture/Family Farms
Professional Service Corporation
 Provides Licensed Professional Services
 Doctors, Lawyers, & Accountants

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 Other Legal
Forms Of Ownership
(cont’d)
Nonprofit Corporations
Civic, Charitable, Educational,
Religious
Tax Exempt
Cooperative
Independent Producers
Buys/Sells For Clients
Joint Venture
Fractional Ownership
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