Business Ownerships & Sizes

Flashcards covering forms of business ownership, mergers, and acquisitions.

Sole Proprietorship

A simple business structure where one owner has complete control, is easy to set up, but carries personal liability for all debts and obligations. Business income is reported on the owner's personal tax return.

Partnership

A business in which two or more people share ownership and responsibility, contributing money, property, labor, or skill, and sharing in the profits and losses.

Corporation

A group of individuals acting together as a single entity, where owners (shareholders) have limited liability and transferable ownership. Subject to double taxation.

LLC (Limited Liability Company)

A business structure that offers flexibility in management, avoids double taxation, and has no restrictions on ownership. Profits and losses are passed through to the owners' individual tax returns.

LLP (Limited Liability Partnership)

A business structure often used by professional firms where each partner has limited liability, and profits/losses are passed through to individual partners.

Franchise

A business model where a franchisor licenses trademarks and methods to a franchisee for a prescribed period.

Merger

The consolidation of two independent companies into one larger company, where one of the original companies ceases to exist.

Vertical Merger

A merger of two organizations with a buyer-seller relationship, operating at different levels within an industry’s supply chain.

Horizontal Merger

A merger of companies that are direct competitors in the same industry, aiming to eliminate competition and gain a larger market share.

Acquisition

When a company purchases the assets of another business, allowing the acquired company to continue operating as it did prior to the acquisition.