Forms of Business Ownership

Yoong Woo

Sole Proprietorship

Sole Proprietorship

Individuals who want to work and make decisions independently

Little government regulation Great risk for the owner

Partnership

Partnership

Owned and controlled by two or more people

Partners share an idea for a business Partners want to cooperate in

managing and investing, and want to share the risks and awards.

Corporation

Corporation

Separate legal entity owned by one or more shareholders managed by a board of directors

More difficult to form Subject to more regulations Limited liability for investors

Others

LLC

Limited liability company (LLC) is a flexible form of enterprise that blends elements of partnership and corporate structures.

Examples: Ernst & Young (E&Y) LLP, PricewaterhouseCoopers LLB, Deloitte & Touche LLP and KPMG LLP.

Joint Venture

Two parties come together for a finite time to develop a new entity ad new assets by contributing equity. They share revenues, expenses and assets.

Examples: Dow Corning, MillerCoors, Sony Ericsson, and Penske Truck Leasing.

Franchise

Franchising is the practice of using another firm’s successful business model.

Examples: Almost all fast food restaurants.

S-Corporation

S corporations do not pay for any federal income taxes. The income of the corporation is divided and passed through to its shareholders.

Nonprofit Corporation

An organization that does not distribute its surplus funds to owners or shareholders, but instead uses it to help them pursue its goals.

Examples: Charities, foundations, and religious organizations.

Cooperative

A business organization owned and operated by a group of individuals for their mutual benefit.

Examples: Dairy Farmers of America, Lancaster Farm Fresh, and Land O’Lakes.