Types of Legal Ownership Homework

Types of Legal Ownership

Ownership Structures�

Sole Proprietor�

General Partnership�

Limited Liability Company (LLC)�

Corporation�

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Number of Owners�

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One or more�

Multiple�

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Formation Difficulty�

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Low�

Medium�

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Liability�

Sole proprietor has unlimited liability.�

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Officers/shareholders are not typically responsible for the debts of the corporation.�

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Operational Requirements�

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There are relatively few legal requirements.�

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Formal board of directors, annual meetings, and annual reporting required.�

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Management�

Sole proprietor has full control of management and operations.�

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Members have an operating agreement that outlines management.�

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Federal Taxation�

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It is not a taxable entity. Each partner pays tax on his/her share of income and can deduct losses against other sources of income.�

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It is taxed at the entity level. If dividends are distributed to shareholders, they are also taxed at the individual level.�

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Introduction to Business in a Technology World