BUS 251 Chapter Notes - Chapter 11: Limited Liability, Capital Account, Share Capital
12 Dec 2014
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Sole proprietorship (1 owner) o o o o. The business and the owner are the same legal entity. All the profits and losses belong to the owner, and the owner is responsible for making all decisions. The profits are combined with the personal income of the owner and are taxed together. Has unlimited liability, which is the owner assumes all the risk if the business runs into any problems: only has one account (owner"s capital), it is used when: The owner puts new capital into the business. The owner withdraws cash from the business (withdrawal), which is similar to dividends. Partnership (2+ owners) o o o o o o. How the partners will make decision about the partnership. How the profits and losses are shared among the owners. How the assets will be distributed if the partnership is dissolved. The rights and responsibilities of the owners are usually specified in a partnership agreement.
