Discuss a few of the characteristics of sole proprietorships, partnerships and corporations.
What will be an ideal response?
a. Sole Proprietorships are owned by one person and usually are fairly small. The owner is personally accountable for actions taken in the name of the business.
b. A partnership has the benefit of two or more people joining together to share their talents, their capital and the risks of business. Like proprietorships, the owners of partnerships are personally accountable for the actions taken in the name of the business. A partner is often responsible for the actions of the other partners as well.
c. Unlike proprietorships and partnerships, a corporation is designated as a separate legal entity by the state in which it is incorporated. The corporate form allows the potential of obtaining larger sums of capital than other forms. Other advantages of the corporate form are limited liability, continuity, transferability of ownership and professional management. Disadvantages include double taxation, excessive governmental regulation, and complexities in formation.
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