Forms of Business Ownership

This set of flashcards covers key concepts and terms related to the forms of business ownership, partnerships, corporations, and franchising.

Sole Proprietorship

A business owned, and usually managed, by one person.

Partnership

A legal form of business with two or more owners.

Corporation

A legal entity with authority to act and have liability separate from its owners.

General Partnership

A partnership in which all owners share in operating the business and in assuming liability for the business’s debts.

Limited Partnership

A partnership with one or more general partners and one or more limited partners.

Unlimited Liability

The responsibility of business owners for all debts of the business.

Limited Liability

The responsibility of a business’s owners for losses only up to the amount they invest.

Master Limited Partnership (MLP)

A partnership that acts like a corporation and is traded on a stock exchange but is taxed like a partnership.

Limited Liability Partnership (LLP)

A partnership that limits partners’ risk of losing their personal assets to only their own acts and omissions.

B Corp

A mission-based company that aims to do good as well as earn profits.

S Corporation

A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships.

Limited Liability Company (LLC)

A business structure similar to an S corporation but with fewer restrictions and requirements.

Merger

The result of two firms forming one company.

Acquisition

One company’s purchase of the property and obligations of another company.

Franchise Agreement

An arrangement whereby a franchisor sells the rights to use a business name and sell a product or service to franchisees.

Cooperative (Co-Op)

A business owned and controlled by the people who use it, serving mutual needs.