Ch 1 Powerpoint Notes
Types of Business Organization
Sole Proprietorship
Definition: Owned and controlled by one individual.
Characteristics:
Simple to establish.
Beneficial tax advantages.
Examples: Small businesses like barber shops, auto repair shops, and farms.
Partnership
Definition: Owned by two or more individuals.
Characteristics:
Easy to establish.
Shared control and resources.
Tax advantages similar to sole proprietorships.
Corporation
Definition: A distinct legal entity separate from its owners.
Characteristics:
Ownership transfer is simpler (shares of stock).
Easier to raise capital.
Limited liability for owners.
Disadvantage: Higher personal income tax compared to sole proprietorships and partnerships.
Usage: Accounts for most U.S. business revenue despite fewer numbers than sole proprietorships and partnerships.
Hybrid Forms
Description: Combines benefits of partnerships and corporations.
Examples: Limited Liability Companies (LLCs) and Subchapter S Corporations.
Users and Uses of Financial Information
Purpose of Financial Information: Aided decision-making across entities.
**Accounting