Untitled Flashcards Set

Sole Proprietorship

A business owned by a single individual who has full control and personal liability.

What is a pro of being a sole proprietor?

It’s easy and inexpensive to start, giving the owner full control of the business.

What is a con of being a sole proprietor?

The owner has unlimited personal liability and risks losing personal assets if the business fails.

General Partnership

A business structure where partners share resources, skills, and responsibilities.

What is a pro of a general partnership?

Partners can share resources, skills, and responsibilities with a simple setup.

What is a con of a general partnership?

Each partner is personally liable for the business’s debts and the actions of the other partners.

Limited Partnership (LP)

A partnership with both general and limited partners, where limited partners are not personally liable.

What is a pro of a limited partnership?

Limited partners can invest without being personally liable or involved in daily operations.

What is a con of a limited partnership?

General partners still carry full personal liability for debts and legal issues.

Limited Liability Partnership (LLP)

A partnership that protects all partners from personal liability for the actions of other partners.

What is a pro of an LLP?

All partners are protected from personal liability for the actions of other partners.

What is a con of an LLP?

LLPs are restricted to certain professions and require more legal formality than general partnerships.

C Corporation

A legal entity that provides owners with strong liability protection and can raise capital through stock.

What is a pro of a C corporation?

Owners have strong liability protection and the ability to raise capital through stock.

What is a con of a C corporation?

It faces double taxation and has strict rules, reporting, and administrative requirements.

S Corporation

A corporation that offers limited liability and avoids double taxation by passing income to shareholders.

What is a pro of an S corporation?

It offers limited liability and avoids double taxation through pass-through income to shareholders.

What is a con of an S corporation?

It has restrictions on ownership, including a 100-shareholder limit and U.S. residency requirements.

Benefit Corporation (B Corp)

A corporation that legally pursues social or environmental goals alongside profit.

What is a pro of a B Corp?

It allows a company to legally pursue social or environmental goals alongside profit.

What is a con of a B Corp?

It requires detailed reporting and may face slower decision-making due to its dual mission.

Limited Liability Company (LLC)

A flexible business structure that offers liability protection and tax benefits.

What is a pro of an LLC?

It offers flexible taxation and protects owners’ personal assets from business debts.

What is a con of an LLC?

Some states charge extra fees, and self-employment taxes may be higher than in corporations.

Nonprofit

An organization established for charitable purposes that is tax-exempt and can receive funding.

What is a pro of a nonprofit organization?

It is tax-exempt and can receive public and private funding for a charitable or social mission.

What is a con of a nonprofit organization?

It cannot distribute profits and must meet strict government reporting and compliance standards.

Joint Venture

A business arrangement where two or more parties pool resources for a shared project.

What is a pro of a joint venture?

It lets businesses pool resources and expertise for a shared project or goal.

What is a con of a joint venture?

It can lead to disagreements and unclear responsibilities between parties.