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Ownership Structures. Proprietorships- a single owner with unlimited liability. Partnerships- a group of owners each with unlimited liability. Corporations- owned by limited liability stockholders. Proprietorships account for almost 80% of firms

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Ownership structures
Ownership Structures

  • Proprietorships- a single owner with unlimited liability.

  • Partnerships- a group of owners each with unlimited liability.

  • Corporations- owned by limited liability stockholders.

    Proprietorships account for almost 80% of firms

    Corporations account for over 90% of total revenue.


Proprietorships

Pros

Easy to set up

Simple decision making

Profits taxed only as income

Not much government regulation

Cons

Entire wealth at stake

Horizon limited to owner

Unchecked decisions

Capital & labor are expensive

Proprietorships


Partnerships

Pros

Easy to set up

Diversified decision making

Profits taxed only as income

Limited regulation

Cons

Complex decision making

Entire wealth at risk

Responsible for Partner

Capital & labor expensive

Partnerships


Corporation

Pros

Limited liability

Low cost capital

Professional management

Perpetual life

Long term labor contracts

Cons

Complex decision making

Firm profits are taxed and dividends and capital gains taxed as shareholder income too.

Government regulation

Principle agent problem

Corporation


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