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1. Ease of starting and ending the business
2. Being your own boss
3. Pride of ownership
4. Leaving a legacy
5. Retention of company profits
6. No special tax (taxed as the person income of the owner, and and pays normal income tax)
1. Unlimited liability
2. Limited financial resources
3. Management difficulties
4. Overwhelming time commitment
5. Few fringe benefits ( No paid health insurance, vacations, etc)
6. Limited growth
7. Limited life span ( Business no longer exists once the sole proprietors dies or retires)
1. Limited Liability
2. Ability to raise more money to invest
3. Size ( Can raise bigger amounts of money to work with bigger corporations and factories)
4. Perpetual life
5. Ease of ownership change
6. Ease of attracting talented employees
7. Separation of ownership from management
1. Initial cost
2. Extensive paperwork
3. Double taxation
4. Two tax returns
5. Size (can become to inflexible and tied down)
6. Difficulty of termination
7. Possible conflict with stockholders and board of directors
1. Have no more than 100 shareholders
2. Have shareholders that are individuals or estates, and who are citizens or permanent residents of the US
3. Have only one class of stock
4. Derive no more than 25% of income from passive resources
1. Large start-up costs
2. Shared profit
3. Management regulation
4. Coattail effects ( What happens to your franchise if other franchises fail?)
5. Restricting on selling
6. Fraudulent franchisers (Not all are big like McDonald's and Subway--"you get what you payed for")
1. Two owners minimum (More than one)
2. Ease of formation--not as easy as proprietorship because you must find a partner
3. When a partner dies, the business dies
4. Unlimited & Limited Liability (Only have up to the investment that they made in the company)
5. Taxed at the individual partners tax rate
1. One to infinity of owners
2. Formation is complex (must follow state rules)
3. Perpetual life (Does not die until the owner dissolves it)
4. Limited Liability (Only can claim assets of the corporation)
5. Subject to double taxation
- Have no more than 100 shareholders.
- Have shareholders that are individuals or estates and are citizens or permanent residents of the U.S.
- Have only one class of stock.
- Derive no more than 25% of income from passive sources.
* If an S corporation loses its S status, it may not operate under it again for at least 5 years