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AOF Principles of Accounting
Lesson 2
Business Forms and Types
Student Resources
Resource | Description |
Student Resource 2.1 | Advantages and Disadvantages: Business Forms |
Student Resource 2.2 | Practice: Business Forms and Types Case Studies |
Student Resource 2.1
Advantages and Disadvantages: Business Forms
Student Name:_______________________________________________ Date:___________
Directions: Use the chart below to answer the questions on the following page.
| Advantages | Disadvantages |
Sole Proprietorship:A business owned by one person | Easy and inexpensive to form and dissolveNo profit sharingComplete control of companyIndependence of owner(s)Few government regulationsBusiness profits taxed at personal level | Unlimited personal liabilityLimited management expertiseLimited access to capitalExtensive time commitmentsDifficult to sellLimited life |
Partnership:A business owned by two or more people | Easy to formAccess to more capitalMore management expertiseFew government regulationsBusiness profits taxed at partner levelEasy to change owners | Unlimited personal liabilityProfit sharingPotential disagreements among partnersDifficult to sellLimited life |
Corporation:A business that has one or more owners | Limited personal liabilityManagement expertiseEasier to raise capitalEasy to sellUnlimited life | More government regulations: complicated formation, may need attorney or accountant to set upDouble taxation: once on corporate profits and again on profits distributed as dividendsAbsentee owners |
LLC (limited liability company):A business that also has one or more owners | Limited personal liabilityManagement expertiseUnlimited lifeBusiness profits taxed at personal level | More government regulations: complicated formation, may need attorney or accountant to set upAbsentee owners |
1. What’s the difference between a partnership and a corporation?
2. Under what conditions would you want to open an LLC?...
Lesson 2
Business Forms and Types
Student Resources
Resource | Description |
Student Resource 2.1 | Advantages and Disadvantages: Business Forms |
Student Resource 2.2 | Practice: Business Forms and Types Case Studies |
Student Resource 2.1
Advantages and Disadvantages: Business Forms
Student Name:_______________________________________________ Date:___________
Directions: Use the chart below to answer the questions on the following page.
| Advantages | Disadvantages |
Sole Proprietorship:A business owned by one person | Easy and inexpensive to form and dissolveNo profit sharingComplete control of companyIndependence of owner(s)Few government regulationsBusiness profits taxed at personal level | Unlimited personal liabilityLimited management expertiseLimited access to capitalExtensive time commitmentsDifficult to sellLimited life |
Partnership:A business owned by two or more people | Easy to formAccess to more capitalMore management expertiseFew government regulationsBusiness profits taxed at partner levelEasy to change owners | Unlimited personal liabilityProfit sharingPotential disagreements among partnersDifficult to sellLimited life |
Corporation:A business that has one or more owners | Limited personal liabilityManagement expertiseEasier to raise capitalEasy to sellUnlimited life | More government regulations: complicated formation, may need attorney or accountant to set upDouble taxation: once on corporate profits and again on profits distributed as dividendsAbsentee owners |
LLC (limited liability company):A business that also has one or more owners | Limited personal liabilityManagement expertiseUnlimited lifeBusiness profits taxed at personal level | More government regulations: complicated formation, may need attorney or accountant to set upAbsentee owners |
1. What’s the difference between a partnership and a corporation?
2. Under what conditions would you want to open an LLC?...