ECON 101 Chapter Notes - Chapter 3: Lemonade Stand, Limited Liability, Sole Proprietorship
13 Jan 2017
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Few requirements: decisions do not require approval from higher ups , keep all profits, does not pay separate business income taxes business is not a separate entity. Corporation exposition will explain this more: psychological factor of being own boss, easy to get out of business, disadvantages, owner has unlimited liability (#1 disadvantages) Ultimately responsible if the business fails: difficult to raise capital/sales, size and efficiency. Size of business too small to cover multiple jobs at once: may hire several employees to stay open. Getting money upfront is difficult: cost of carrying minimum inventory, often has limited managerial skills, difficult to attract qualified employees. Qualified chef will not work at a hamburger shop: larger employees can offer more fringe benefits. Health & dental: limited life of business, example: lemonade stand; cranberry lane (downtown shops) Marriage: ease of management bc/ varied expertise, lack of special taxes. Better explained in corporations: easier to attract capital than a proprietorship.
