6. Easy and inexpensive to register
Low start-up cost
All profits go to owner
Owner in direct control
Some tax advantages - a lower tax
bracket when profits are low
7. Unlimited liability (if you have business
debts, claims can be made against your
personal assets to pay them off)
Lack of continuity
Difficulty in raising capital
Income is taxable at personal rate –
thus, a higher tax bracket if business is
profitable
8. it is a business
owned by two or
more individuals
who contribute
money, property
and talent .
These individuals
are called
partners
9. Types of Partnerships that should be
considered:
1. General Partnership
2. Limited Partnership and
Partnership with limited liability
3. Joint Venture
10. General Partnership
Partners divide responsibility for
management and liability, as well as the
shares of profit or loss according to their
internal agreement. Equal shares are
assumed unless there is a written
agreement that states differently.
11. Limited Partnership and Partnership with
limited liability
“Limited” means that most of the partners
have limited liability (to the extent of their
investment) as well as limited input regarding
management decision, which generally
encourages investors for short term projects,
or for investing in capital assets. This form of
ownership is not often used for operating
retail or service businesses. Forming a
limited partnership is more complex and
formal than that of a general partnership.
12. Joint Venture
Acts like a general partnership but is clearly
for a limited period of time or a single
project. If the partners in a joint venture
repeat the activity, they will be recognized
as an ongoing partnership and will have to
file as such and distribute accumulated
partnership assets upon dissolution of the
entity.
13. Easy and inexpensive to form
Low start-up costs
Sharing of responsibility
Tax advantage — lower tax bracket if
income from the partnership is low or
loses money.
14. Unlimited liability
Lack of continuity
Difficulty in finding a suitable partner
Divided authority
High tax bracket if income from the
partnership is high
15. - it is a business
organized as a
separate legal
entity/artificial
person from the
owners. As a
legal entity it can
enter into
contracts, buy
and sell property
and stocks
16. Limited liability
Ownership is transferable
Specialized management
Ease of raising capital
Possible tax advantage as taxes may
be lower for an incorporated business
17. Close regulation
Most expensive to organize
Extensive record keeping
Possible conflict between shareholders
and directors
18. - it is a business
owned and
controlled by an
association of
members who
have voluntarily
joined together
to achieve a
lawful common
social or
economic end
19. Owned and controlled by its members
Democratic control (one member, one
vote)
Limited liability
Profit distribution
20. Longer decision-making process
Participation of all members is
required in order to succeed
Possible conflict between members
Extensive record keeping