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Chapter 6

COMMERCE 1B03 Chapter Notes - Chapter 6: Sole Proprietorship

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Rita Cossa

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Chapter 6
Forms of Business Ownership
Starting a Small Business
Three major forms of business ownership
1. Sole proprietorship: a business that is owned, and usually managed by one
2. Partnership: a legal form of business with two or more people
3. Corporation: a legal entity with authority to act and have liability separate from
its owners.
Sole Proprietorship: most common form
Ease of starting an ending
Being your own boss
Pride of ownership
Retain profit
No special tax: all profits are taxes as
the personal income of the owner
Less regulations
Unlimited liability: the responsibility
of business owners for all of the debts
of the business
Limited financial resources
Management difficulties
Overwhelming commitment
Few fringe benefits: you’re your own
boss you don’t get benefits that
accompany working for others
Limited growth: relies on its sole
owner for most of its creativity,
business know-how, and funding
Limited lifespan
Possibly pay higher taxes
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