Setting up a sole proprietorship has advantages like total independence, sole ownership of profits, and low startup costs, but disadvantages include unlimited personal liability, limited access to capital, and business ending if the owner leaves. Corporations are more complex legal entities separate from owners, but establishing one has challenges like high incorporation costs and annual reporting requirements. While not required, partnership agreements outline responsibilities and prevent disputes; contents typically address ownership, profits/losses, capital contributions, and more. Franchise benefits include an established brand and support system, but costs are high and flexibility is limited by contractual obligations to the franchisor.

2. QUESTION 1
WHAT ARE THE
ADVANTAGES AND
DISADVANTAGES OF
SETTING UP A SOLE
PROPRIETORSHIP

3. What is sole proprietorship?
SOLE PROPRIETORSHIP
Also known as sole trader
The simplest form of business organization
It is owned by one person
The largest number of businesses in most
countries

4. Advantages
Total independence in making decisions
Sole ownership of profits
Pay only personal income tax and not business
tax
Low set up costs
Low risk

5. Disadvantages
Entirely responsible for debts and risks
Unlimited personal liability
Limited access of capital
Limited skills and capabilities
Feeling of isolation
Short life of business
Personal assets will be affected

6. QUESTION 2
WHAT ARE THE
POSSIBLE
CHALLENGES THAT
ONE WOULD FACE IN
DECIDING TO SET UP
A CORPORATION

7. CORPORATION
What is corporation?
 The most complex form of business
 It is a legal entity separate from its constituent
members
 Formed by several persons who are able to
own property,draw contacts and employ people

8. Possible challenges to set up a corporation
Difficult to set up
Costly incorporation process
High taxation
Financial report must be checked by internal and
external auditors
Have to do annual meetings and publish it to public

9.  3.
If one decides to  4.
What are the
set up a benefits and
partnership, is it drawbacks of setting
necessary to have a up a franchise
partnership business?
agreement? If
yes, what should the
content of the
partnership
agreement include?

10.  Partnership
 A type of business
• Two or more individuals share
ownership, including both losses and profits
 Taxed for the income of the partnership on
their personal income tax
 Not required to pay a corporate tax.
 Two types of partners
• At least one partner must be a general partner
• Limited partner

11.  “Partnership agreements are written
documents that explicitly detail the
relationship between the business partners
and their individual obligations and
contributions to the partnership.”
- http://www.inc.com/encyclopedia/partnership-agreement.html

12. It is not necessary to have a partnership agreement when one decides to set up a
partnership. However, it is recommended to do so in order to stipulate everything
in their agreement so as to avoid future clashes. The agreement states clearly the
exact status and responsibility of each partner, as well as other information such
as how the profits and risks are divided, duration of the partnership, etc. It can
contain as much or as little information as the partners wish. The law does not
specify what it must contain. Nonetheless, the usual contents are:
 Name of the partnership
 Purpose of the business
 Location of the principal business
 Duration of the partnership
 Names of the partners and their address(es)
 The capital to be contributed to each partner
 The ratio in which profits or losses are to be shared
 The rate of interest, if any, to be paid on capital before the profits are shared
 The rate of interest, if any, charged on partnership drawings
 Salaries to be paid to partners
 Arrangements for admission of new partner(s)
 The procedures to be carried out when a partner retired or dies

14.  It‟s much more complex than that.
• partnership agreements should cover all possible business
situations that could arise during the partnership‟s life
• Recommended to get a legal counsel in drafting and
reviewing the finished contract.
 Inthe absence of a formal partnership
agreement, the guidelines of the Partnership Act
1961 shall be applied.
• This determines how the assets and debts of the
partnership are distributed.

15.  Franchise
• An alternative way of starting a business from
scratch rather than setting up on your own.
• Not a „form‟ of business, but a system where
companies (franchisee) are granted the right to
operate a business according to a special contract
with a parent organization (franchiser)

16. BENEFITS DRAWBACKS
 Provide training and support  Initial high cost
• franchisers would provide the necessary
training and guidance to franchisees • Widely known brands and trademarks are
 Possess brand name appeal not cheap. It may vary from RM100,000-
• a franchise business has a higher chance of 500,00 depending on the franchise fee and
success if the franchisee buys a widely the capital needed to start the business.
recognized and established trademark • Franchisees are required to pay a continual
 Standardized quality of goods and services
royalty
• Most franchise businesses would have uniform
standards of quality and services  Stifles creativity
 Possess proven track record • Franchisees are allowed limited flexibility
• for the past 10 years with more than 50 outlets and creativity in their business as they have
performing well financially across the globe. to abide to the franchiser‟s contract.
• Lenders are usually fairly relaxed when it
comes to financing franchise purchases  Lack of franchise commitment
• Bankers look at successful franchise chains as • Franchisers may not always stick to their
having a lower risk of repayment default promises.
 Financial assistance (if the franchiser is
willing to provide) • There have been cases where franchisees
• Some franchisers provide financial assistance
have been disappointed by the lack of
to chosen, potential franchisees by providing commitment by the franchisers.
them with equipment and inventory.

17.  http://www.inc.com/encyclopedia/partnership-
agreement.html
 http://businesstm.com/online-business-
blog/what-is-a-partnership.html
 http://franchises.about.com/od/franchisebasics/tp
/reasons-to-buy-franchise.htm
 http://www.inc.com/tools/partnership-agreement-
template.html

18. What are the possible benefits that
an entrepreneur could obtain by going
into a joint venture with another
company?

19. WHAT IS JOINT VENTURE?
Similar to a partnership but is limited to a period of time
or a single project.
An agreement between two or more parties to invest in a
single business or property.
An entity formed between two or more parties to
undertake economic activity together, and it is often seen as a
very viable business alternative ,companies can complement
their skill in achieving the business objective.

20. H OW J O I N T V E N T U R E
WO R K S ?
Both parties would agree to create a new entity b
contributing in terms of enquity and the
revenues, expenses and control of the enterprise would
be shared.
A joint venture is considered to be a good way for
companies to partner without having to merge.

21. BENEFITS????
Partners save MONEY
Reduce risks through CAPITAL and RESOURCE SHARING
Give smaller companies the CHANCE TO WORK WITH
LARGER ONES to develop, manufacture and market new products.
Give all sizes companies the OPPORTUNITY to increase
sales, gain access to wider markets and enhance technological
capabilities through R&D underwritten by more than one party.

22. OTHER BENEFITS???
More chance to success
Better profits
More ideas

23. THE END
(^_^)V