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Sole Proprietorship & Partnerships

Sole Proprietorship & Partnerships. BELL RINGER- Define these key terms: Sole Proprietorship (226) Unlimited Liability (228) Limited Life (228) General Partnership (233) Limited Liability Partnership (232). Sole Proprietorship & Partnerships. Exit Slip P 120

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Sole Proprietorship & Partnerships

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  1. Sole Proprietorship &Partnerships BELL RINGER- Define these key terms: Sole Proprietorship (226) Unlimited Liability (228) Limited Life (228) General Partnership (233) Limited Liability Partnership (232) Helf/Napp

  2. Sole Proprietorship &Partnerships Exit Slip P 120 BELL RINGER- Define these key terms: Sole Proprietorship (226) Unlimited Liability (228) Limited Life (228) General Partnership (232) Limited Liability Partnership (233) Helf/Napp

  3. A business organization is an establishment formed to carry on commercial enterprise. E. Napp

  4. Sole Proprietorship • SOLE PROPRIETORSHIP IS A BUSINESS OWNED AND OPERATED BY AN INDIVIDUAL. • Doesn’t mean one worker, just one owner • Most businesses in US are sole proprietorships • Account for only a small % of total sales E. Napp

  5. A sole proprietorship is a common and popular form of business in the United States. E. Napp

  6. Advantages of Sole Proprietorships • BIGGEST ADVANTAGE: OWNER MAKES ALL DECISIONS • SIMPLE TO CREATE- VERY LITTLE PAPERWORK • Owner keeps all profits after expenses (and taxes). • Many people enjoy being the boss. E. Napp

  7. A sole proprietorship is the least-regulated form of business in the United States. E. Napp

  8. Zoning Laws • While there are few laws regulating sole proprietorships, zoning laws do restrict where businesses can be located. • A zoning law is a law that states where businesses can be established in a town. • Generally, towns have business districts and residential neighborhoods. E. Napp

  9. Disadvantages of Sole Proprietorships • GREATEST DISADVANTAGE: OWNER HAS UNLIMITED PERSONAL LIABILITY • UNLIMITED LIABILITY MEANS THAT THE OWNER HAS THE OBLIGATION TO PAY ALL LOSSES AND DEBTS. • Includes lawsuits and settlements • Includes paying out of personal savings or assets (house, car) • Has a limited life E. Napp

  10. Unlike a sole proprietorship, a partnership is a business owned and operated by two or more people. E. Napp

  11. General Partnership • GENERAL PARTNERSHIP: MOST COMMON • ALL PARTNERS SHARE EQUALLY IN RESPONSIBILITY & LIABILITY • All partners equally responsible for the business. E. Napp/Helf

  12. If you form a general partnership, your partner’s actions directly affect you. E. Napp

  13. Limited Partnership • IN A LIMITED PARTNERSHIP, ONE PARTNER RESPONSIBLE AND LIABLE FOR BUSINESS DEBT AND LIABILITY • OTHER PARTNERS ARE LIMITED PARTNERS: ONLY RESPONSIBLE FOR WHAT THEY INVESTED INTO PARTNERSHIP • Share in profits determined by prior agreement E. Napp

  14. Limited Liability Partnership • Only some individuals are allowed to form such partnerships. • Doctors, lawyers, and accountants are allowed to form limited liability partnerships. • In these partnerships, liability is limited. E. Napp

  15. In limited liability partnerships (LLPs), each partner is a limited partner and only responsible for his own actions. E. Napp

  16. Liability • It is important to remember that liability is the legal obligation to pay all debts. • In the three different forms of partnerships, liability differs. • The varying degrees of liability determine the various types of partnerships. E. Napp

  17. General partners share equally in responsibility and liability. E. Napp

  18. In a limited partnership, one partner must be fully liable and responsible. E. Napp

  19. The limited partner only contributes money and has limited liability. E. Napp

  20. In limited liability partnerships, all partners have limited liability in some situations. E. Napp

  21. Exit Slip • Page 231, # 9: • Page 237, “Economics in Practice” (Blue Column): 1-4 • HW: Read 238-247 # 2-5 • (Grading key terms 138 and chart off page 151) E. Napp

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