INTRO TO BUSINESS
BUSINESS
TYPES OF OWNERSHIP
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PROPRIETORSHIP
Simple business with one sole owner, they can hire employees but the money you make at the
end of the day is yours.
Characteristics
The money and business are entirely yours, but so are the liability, debt, and responsibility. You
cannot separate yourself from your business. It is funded through either savings or loans. You
must also pay income taxes, social security, and self-employment taxes.
Examples
A&W, Sears, and JCPenny
PARTNERSHIP
Same as a Proprietorship but with two or more owners.
Characteristics
Easy to start and you get a portion of the money. You have less liability/debt. You need a
partnership agreement but this can be an oral/verbal agreement. Disagreement issues, there
might be in-fighting. Still have to pay the same taxes.
Examples
Red Bull, Go Pro, Pottery Barn, Uber, Spotify, Dr. Pepper, and (formerly) Facebook
CORPORATION (C CORP)
Corporations are a legal entity that is separate from their owners. It gives strong protection for
the owners when it comes to liability. But it costs more compared to other options
Characteristics
Can have stock in it. Liability protection. Needs a Certificate of Incorporation. Unlimited
shareholders. You are guided by a board of directors. You don’t have to pay as many taxes either.
Lots of legal requirements and setup. Also, a big downfall is that you can get double taxed.
Examples
McDonald's, Apple, Starbucks, and Microsoft
S CORPORATION (S CORP)
Very similar to C Corp but the owner is taxed instead of the business. This prevents double
taxation. In return along with all the stuff required, you have to follow strict obligations about
shareholders.
Characteristics
Less tax, limited shareholders, only domestic shareholders, ]
Examples
idk
LLC
Easy to set up, business isn’t taxed, individuals are. Allows 1 or more people.
Characteristics
Liability protection, debt protection, not selling stock, have to pay taxes.
Examples
Sony, Nike, eBay, and Pepsi
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