Owned by a single person, which means all liabilities and assets are under a single person's name, the owner.
This owner makes all decisions and is liable for those decisions.
The funds the owner can use are only his personal funds.
The funds may be hard to come by in that it can be difficult for a single owner to acquire loans.
Chances are that if the owner were to die, the business would likely die with the owner.
The business owned by a sole proprietor is not legally differentiated from each other.
It is not usually registered as a business.
If the the business were to be sued, the owner and only the owner would be sued rather than the business, even it it operates under a fictitious name.
If a person named John owns his business and the business is called "Wiper's N US," he is operating under a fictitious name and must register his business. If he were to only use his name and his name alone, he would not be required to register as a business.
If the sole proprietorship uses services or supplies that required a license, then it must be registered as a business.
When selling products within one State, the operate under the state's UCC (Uniform Commercial Code), but if the goods were being sold across State lines, they would then operate under the Federal UCC.
Sole Proprietorships can do business with all sorts of companies, such as franchises, partnerships, and corporations.
Limited and General Partnerships:
Within a partnerships, two or more individuals agree to share the money, skills, and efforts and even the possible liabilities that may come about.
These partners share their expertise in specific fields.
They operate as it's own legal entity.
They must be registered with the secretary of state.
Partners can also act on behalf of each other.
There are two types of partnerships, General and Specific.
General partners share the expertise, money, and skills to run the business.
A limited partnership has one partner who may have the skill needed and the other know the business end.
Limited partners may only contribute monetary assets to the business.
Franchise:
A franchise is a relationship between a franchisor and a franchisee
A franchisor must acquire lincensure for it's business.
It grants other companies a license to sell or distribute services or supplies.
The franchisee recives that license to sell or distribute those services or supplies.
The franchisee also has to pay a franchise fee.
Corporation:
There a different types of corporations, S and C Corporations.
A coorporation is it's own legal entity.
It is owned by it's shareholders.
It is protected from the law from illegal search and siezurs and also right to free speech. Unlike a sole proprietorship, the corporation would the the one sued and not just one person.
The employees and the officers are protect under the fifth ammendment, where the corporation is not.
The shareholders have limited liability, but a corporation can act illegally, which is why there is an act called "piecing the coporate veil" which makes the officers and sharholders liable for any wrongdoing.
The corporation must comply with state stuatory laws in which the wish to do business in. Most businesses are incoporated in Delaware, where that state does not have those specific laws.
It complies with whichever state it does business in.
It also must comply with the Federal UCC if it operates outside of more than one state.
A C-Corporation Cannot have more than thirty shareholders and the shares are not publicy traded, whereas an S-Coporation cannot have more than thirty-five shareholders and taxed like partners.
Limited Liability Company:
It is a legal form of a company tht provides limited liability to the owner across the United States.
It is a combination of a corporation and a partnership or a sole
