Mkt 421 Wk 1
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Vulgamore Wk. 1
Brian Vulgamore
FIN419
June 4, 2012
Jennifer Stapp
Vulgamore Wk. 1
When a group of people start a business, they have to decide if they will start that business under a partnership or a limited liability corporation. In a general partnership, partners have unlimited liability and each of them is legally liable for the debts of the partnerships. A limited liability corporation is an entity created by law giving it the powers of an individual. If the group of people decided to incorporate, they would not have any liability with the exception of what money they have invested into the company. If the group decided to start as a partnership, they could always incorporate later.
Corporations make up only about 15% of all business organizations, and this 15% accounts for nearly 90% of business receipts and about 80% of net profits for business word-wide. The owners of a corporation trade their cash for both common stock and preferred stock and are called stockholders (Gitman, 2009). A corporation is set up as a democracy and the shareholders vote on the outcome of the company. There can be as few as one person in a limited liability corporation and that person can own every share in the company. A corporation does not have to sell its stock publicly. The profits are paid back to the individuals based on the number of shares they own in the company. If an owner decides to separate from the corporation, they can simply sell their shares. There are no assets to liquidate as they are property of the corporation. If the corporation incurs debt that it cannot pay, the debtors can only acquire what assets that corporation owns. The owners of the corporation have no personal liability.
The remaining 85% of businesses are either sole proprietorships or partnerships. In either of these scenarios the parties involved in a general...
Brian Vulgamore
FIN419
June 4, 2012
Jennifer Stapp
Vulgamore Wk. 1
When a group of people start a business, they have to decide if they will start that business under a partnership or a limited liability corporation. In a general partnership, partners have unlimited liability and each of them is legally liable for the debts of the partnerships. A limited liability corporation is an entity created by law giving it the powers of an individual. If the group of people decided to incorporate, they would not have any liability with the exception of what money they have invested into the company. If the group decided to start as a partnership, they could always incorporate later.
Corporations make up only about 15% of all business organizations, and this 15% accounts for nearly 90% of business receipts and about 80% of net profits for business word-wide. The owners of a corporation trade their cash for both common stock and preferred stock and are called stockholders (Gitman, 2009). A corporation is set up as a democracy and the shareholders vote on the outcome of the company. There can be as few as one person in a limited liability corporation and that person can own every share in the company. A corporation does not have to sell its stock publicly. The profits are paid back to the individuals based on the number of shares they own in the company. If an owner decides to separate from the corporation, they can simply sell their shares. There are no assets to liquidate as they are property of the corporation. If the corporation incurs debt that it cannot pay, the debtors can only acquire what assets that corporation owns. The owners of the corporation have no personal liability.
The remaining 85% of businesses are either sole proprietorships or partnerships. In either of these scenarios the parties involved in a general...