BA 115 lecture on 27 February 2025 (Ch.5 con.)

Definition: The easiest form of business to create, operated by one individual.
Liability: Unlimited liability; the owner is personally responsible for all debts and obligations of the business.
Lifespan: Ends when the owner dies, sells, or files bankruptcy.

Definition: A form of partnership where all partners share responsibilities and profits.
Liability: Unlimited liability for all partners, meaning personal assets can be used to cover business debts.

Definition: A partnership with one or more general partners and one or more limited partners.
General Partners: Manage the business and have unlimited liability.
Limited Partners: Investors who do not participate in day-to-day operations and have liability limited to their investment amount.

Definition: A legal entity separate from its owners that can own assets, incur liabilities, and sell stock.
Formation: Requires incorporation through the Secretary of State's office; involves costs which can be reduced by doing it oneself.
Liability: Limited liability; personal assets are protected from business debts.
Lifespan: Can exist indefinitely, beyond the lives of its owners.
Taxation: Subject to double taxation—corporate profits are taxed and shareholders are taxed on dividends received.

Definition: A corporation that meets specific IRS criteria and is taxed like a sole proprietorship or partnership.
Eligibility: Limited to 100 shareholders; all must be U.S. citizens or permanent residents.
Liability: Limited liability for shareholders.
Pass-through Taxation: Profits are taxed only as personal income of shareholders, avoiding double taxation.

Definition: A hybrid entity that combines the liability protection of a corporation with the tax benefits of a partnership.
Flexibility: Owners can choose how to be taxed—either as a corporation or on a pass-through basis.
Ownership: Non-transferable; typically does not issue stock.
Formation: Requires registration with state authorities and obtaining an EIN number.
Advantages: Limited liability, flexible ownership rules, and fewer formalities compared to corporations.
Disadvantages: May have fewer tax incentives and potentially more paperwork.

Definition: An arrangement where the franchisor allows the franchisee to use its business model and sell its products/services.
Types: Can be structured as a sole proprietorship, partnership, or corporation.
Pros: Supported by brand recognition, management training, and marketing assistance.
Cons: Franchise agreements can impose restrictions and fees on the franchisee.

Definition: The combination of two or more firms into a single entity, often to improve competitiveness.
Types of Mergers:
- Vertical Merger: Involves companies at different stages of production (e.g., supplier and manufacturer).
- Horizontal Merger: Involves companies in the same industry (e.g., competitors).
- Global Merger: Involves firms in completely unrelated industries.

Definition: One company's purchase of another, can result in the acquisition of assets or obligations of the acquired firm.
Management: Acquisition does not always mean running the company; it can involve restructuring or breaking up the company to sell assets.

Understanding the differences between these business structures is crucial for making informed decisions about starting and running a business.