Proprietorships, Partnerships, & Corporations

1.     CheckPoint: Proprietorships, Partnerships, & Corporations

·         Explain the differences between a proprietorship, a partnership, and a corporation in 200 to 300 words. Why would an entrepreneur want to choose one over the other? If you were starting a new business, which would you choose? Explain why.

Proprietorship - A business structure in which an individual and his/her company are considered a single entity for tax and liability purposes. A proprietorship is a company which is not registered with the state as a limited liability company or corporation. The owner does not pay income tax separately for the company, but he/she reports business income or losses on his/her individual income tax return. The owner is inseparable from the proprietorship, so he/she is liable for any business debts. also called sole proprietorship.

1. One who has legal title to something; an owner.

2. One who owns or owns and manages a business or other such establishment.

A proprietorship is essentially a single owner small business.  The hotdog vendor on the corner would be a proprietorship business, or maybe the local locksmith. 

Partnership - Definition 1
A type of unincorporated business organization in which multiple individuals, called general partners, manage the business and are equally liable for its debts; other individuals called limited partners may invest but not be directly involved in management and are liable only to the extent of their investments. Unlike a Limited Liability Company or a corporation, in a partnership each partner shares equal responsibility for the company's profits and losses, and its debts and liabilities. The partnership itself does not pay income taxes, but each partner has to report their share of business profits or losses on their individual tax return. Estimated tax payments are also necessary for each of the partners for the year in progress. Partnerships must file a return on Form 1065 showing income and deductions. Estimated tax payments are also required if they expect their income to be greater than $1,000.
Definition 2
More generally, a relationship of two or more entities conducting business for mutual benefit.

n. 1. The state of being a partner. 2. a. A legal contract entered into by two or more persons in which each agrees to furnish a part of the capital and labor for a business enterprise, and by which each shares a fixed proportion of profits and losses. b. The persons bound by such a contract. 3. A relationship between individuals or groups that is characterized by mutual cooperation and responsibility, as for the achievement of a specified goal: Neighborhood groups formed a partnership to fight crime.

Noun

1. a relationship in which two or more people or organizations work together in a business venture

2. the condition of being a partner

Partnership an association of two or more persons for carrying on business; the persons collectively—Wilkes.

A partnership seems to be the same as a proprietorship but with more than one individual sharing all owner duties.  An example would be sisters who open up a new bakery, or a father-son construction company.  Both invest the same amount of money and labor and both split the profits equally.

Corporation - The most common form of business organization, and one which is chartered by a state and given many legal rights as an entity separate from its owners. This form of business is characterized by the limited liability of its owners, the issuance of shares of easily transferable stock, and existence as a going concern. The process of becoming a corporation, call incorporation, gives the company separate legal standing from its owners and protects those owners from being personally liable in the event that the company is sued (a condition known as limited liability). Incorporation also provides companies with a more flexible way to manage their ownership structure. In addition, there are different tax implications for corporations, although these can be both advantageous and disadvantageous. In these respects, corporations differ from sole proprietorships and limited partnerships.

–noun

1.	an association of individuals, created by law or under authority of law, having a continuous existence independent of the existences of its members, and powers and liabilities distinct from those of its members.

2.	(initial capital letter) the group of principal officials of a borough or other municipal division in England.

3.	any group of persons united or regarded as united in one body.

4.	Informal. a paunch; potbelly.

            A proprietorship is essentially a single owner small business.  A company with only a few employees and one owner would benefit most from being a proprietorship.   The hotdog vendor on the corner would be a proprietorship business, or maybe the local locksmith.  An individual starting their own small business where they themselves will be doing most, if not all, the work would want this type of business. 

            A partnership seems to be the same as a proprietorship, the difference being, more than one individual shares all owner duties.  An example would be sisters who open up a new bakery, or a father-son construction company.  Both invest the same amount of money and labor and both split the profits equally.  A couple who want to open a business together and invest their own money and time with less than fifty percent of help from other employees may choose this type of business.   The advantage to this type of business over a proprietorship is the owners split all decisions and investments, you are not in the business alone.  

            A corporation is any big business where you have multiple owners, partners, or employees.  In a corporation the business itself is treated as a separate entity from the owners, such as taxes, which are paid separate from the owners.  An example of a corporation would be McDonalds, or Wal-Mart.  An established business that is ready to expand both their employees and investments would consider this type of business. 

            If I were to start a new business I would definitely pick a proprietorship.  A proprietorship is a great place to start a new business.  In a proprietorship you and your business are linked as one.