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• 1 How to form a business

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• What are the advantages of sole proprietorship?

  - Easy to start/end a business
  - You're your own boss
  - No special taxes
  - Pride of ownership
  - Leaving a legacy 
  - Not sharing the profits

• What are the disadvantages of sole proprietorship?

  - unlimited liability
  - limited financial resources
  - management problems
  - limited growth
  - huge time commitment
  - very few benefits
  - limited life span

• Why would unlimited liability be considered a major drawback to sole proprietorship?

  The sole proprietor is liable for all debts and obligations of the business and must pay them even if it means selling your house/car/etc.

• What are the 4 types of partnerships?

  1. General partnership; all participants are equal.
  2. Limited partnership; mix of general and limited partners (they invest, but don't manage/bear risks)
  3. Master limited partnership (MLP): similar to a corporation, but avoiding corporate taxes.
  4. Limited liability partnership (LLP); liability of the owners is limited, they are only responsible for the part of their investment. 

• What are the advantages of partnerships?

  - More financial resources
  - Shared management + pooled skills and knowledge
  - Longer survival
  - No special taxes

• What are the disadvantages of partnerships?

  - Unlimited liability
  - Disagreement among partners
  - Sharing the profit
  - Difficult to end

• What's a conventional (C) corporation?

  A state-chartered legal entity with the authority to act and have responsibilities separate from its owners. 

• What are the advantages of corporations?

  - Limited liability!
  - More financial resources
  - Size
  - Unlimited life span
  - Easy to change ownership
  - Easy to attract employees
  - Separation of ownership form management

• What are the disadvantages of corporations?

  - Initial costs
  - Loads of paperwork
  - Two tax returns
  - Double taxation
  - Size
  - Difficult to end
  - Possible conflict with stockholders/board of directors

• What are S corporations?

  Corporation created by the government which looks like a corporation, but is taxed like sole proprietorships/partnerships