SECTION 2

2 MOST COMMON - SOLE PROPRIETORSHIPS & PARTNERSHIPS

BUSINESS OWNED & OPERATED BY ONE PERSON

= OWNER OF A BUSINESS

SOLE PROPRIETORSHIPS ARE EASIER & CHEAPER TO RUN

PRIDE IN OWNING BUSINESS / GETS ALL THE PROFITS

PROPRIETOR HAS UNLIMITED LIABILITY

OWNER IS FULLy RESPONSIBLE FOR ALL LOSSES AND DEBTS OF BUSINESS

EVERYTHING A BUSINESS OR HOUSEHOLD HOLDS LEGAL CLAIM

OF SOLE PROPRIETORSHIPS

TAKES ALL THE RISKS

QUICK DECISIONS. BUSINESS LESS COMPLICATED. FEWER GOV. REGULATIONS

BIG PROBLEM FOR MANY SOLE PROPRIETORS

USUALLY LOWER. ONLY PAYS PERSONAL INCOME TAXES ON PROFITS.

HIGH SATISFACTION. OWN BOSS. CAN MAKE BUSINESS WHATEVER HE WANTS.

IF HE DOESN'T ENJOY RESPONSIBILITY, CAN BECOME A BURDEN

GETS CREDIT RELATIVELY EASILY. LENDERS CAN TAKE ASSETS IF LOAN ISN'T PAID BACK.

BORROWING A LOT CAN BE DIFFICULT

IF OWNER DIES, GOES BANKRUPT, UNABLE TO WORK - BUSINESS WILL FAIL

INCREASES RISK TO EMPLYEES & CREDITORS

BUSINESS THAT 2 OR MORE PEOPLE OWN OR OPERATE

UNLIMITED LIABILITY

OF PARTNERSHIPS

LOSSES ARE SHARED. PARTNERS MAY SURVIVE A LOSS THAT CAN BANKRUPT A SOLE owner

THEY ALSO SHARE PROFITS

UNLIMITED LIABILITIES FOR BOTH. IF ONE CAN't pay his share...

MORE EFFICIENT. EACH PARTNER DOES WHAT HE'S BEST AT. FEWER GOV. REG.

DISAGREEMENTS CAN LEAD TO TROUBLE RUNNING THE BUSINESS

USUALLLY LOW. PARTNERS PAY PERSONAL INCOME TAX ON PROFITS

PROUD OF OWNING & OPERATING OWN COMPANY

IF PARTNERS CAN'T GET ALONG

PARTNERS COMBINE CAPITAL, MORE $ AVAILABLE...

CREDITORS ARE MORE WILLING TO LEND $

AMOUNT IS LIMITED TO VALUE OF BUSINESS & PERSONAL ASSETS

1 PARTNER LEAVES/DIES - PARTNERSHIP ENDS - NEEDS REORG.

COULD BE UNABLE/UNWILLING TO CONTINUE...

RISK TO EMPLOYEES & CREDITORS

1 OR MORE PARTNERS HAVE LIMITED LIABILITY

IN MANAGEMENT

FOR A SPECIFIC TIME AND PURPOSE

SHORT-TERM INVESTMENT. RESELL FOR PROFIT.