Partnership

· Formed when 2+ ppl operate a business for profit

· Partnership agreement including:

Type 1: General partnership

· Similar to sole proprietorship but 2+ ppl are responsible for the operation

Type 2: Limited partnership (a.k.a. silent partnership)

· Liable for the amt they have invested

· Must also have 1+ general partner

Advantages

· Easy to form, low start up costs

· Additional capital/talent

· Limited liability (for limited partnership only!)

· Little gov. regulations

Disadvantages

· Unlimited liability (general partnership)

· Divided authority

· Difficulty finding suitable partners

Corporation

· Most legal form of business organization

· Legal entities exist separately from owners

· Owners a.k.a shareholders

Type 1: Public shareholders

· Sell shares on public stock exchange

Type 2: Private shareholders

· Limited number of shares

Advantages

· Limited liability

· Easy to raise capital

· Continuous existence

· Transferable ownership

· Tax advantages (income splitting)

Disadvantages

· Expensive to organize

· Gov. restrictions

· Lack of privacy