Business Structures Overview

Sole Proprietorship

• Owner retains all profits and has complete control over business decisions.
• Most profitable if successful, with tax advantages available.
• Unlimited liability: owner is personally responsible for all debts, risking personal assets.
• Workload can be heavier due to sole responsibility for success.
• Limited resources can hinder growth and development.
• Considered the riskiest business structure.

Partnerships

• Involves two or more individuals sharing financial responsibilities and profits.
• Shared start-up costs and profits reduce individual risk.
• Business decisions made collaboratively, promoting cooperation.
• Not as profitable as sole proprietorships; conflicts may arise from disagreements.
• Partners face unlimited liability for debts incurred by the business.
• Reliance on trust among partners for honesty and accountability.
• Limited lifespan; can dissolve if any partner exits.

Corporations

• Formed by incorporating and raising capital through stock sales to the public.
• Can raise significant funds for business expansion; enjoys limited liability.
• Perpetual life allows continuation despite changes in ownership (death or selling of stock).
• Profits distributed among shareholders based on stock ownership.
• Faces more government regulations compared to sole proprietorships and partnerships.

Limited Liability

• Legal protection where investors are not personally liable for corporate debts; only the corporation itself can be sued.

Scarcity

• Concept not defined in the provided text.

Sole Proprietorship (Management Overview)

• Managed by a single owner, ensuring quick decision-making and flexibility.
• Limited skills are confined to the abilities of the owner.
• Profits solely belong to the owner.
• Difficulty in raising funds quickly leads to reliance on personal resources.
• Business lifespan tied to the owner’s life; dissolves upon owner’s death.
• Unlimited liability for business debts exposes owner to significant financial risk.

Partnership (Management Overview)

• Managed by two or more owners, requiring a contractual relationship.
• Decision-making can be slower due to the need for consensus among partners.
• Owners share profits; however, each partner is responsible for business debts.
• Lifespan is limited to the lives of the owners; business ceases upon their death.
• Fundraising is challenging, typically limited to partners’ personal capabilities.

Corporation (Management Overview)

• Ownership is divided among stockholders, allowing for potentially large management teams.
• Decision-making might be sluggish due to the separation of ownership from management.
• Challenges may arise when management’s actions diverge from shareholders' interests.