Title: Select a form of business ownership.
Course: Entrepreneurship, Advanced (12053-II) > Section: Starting an Entrepreneurial Business

Selection should be made from the following legal structures based on an analysis of each in relation to specific business needs:

- Sole proprietorship—owned by one person
- Partnership (both general and limited)—owned by a small group of people, usually two or three
- Corporation—owned by a number of people and operated under written permission from the state, with a separate legal personality from its owners
- Limited liability company (LLC)—a hybrid form of business that has characteristics of both a corporation and a partnership
- Limited liability partnership (LLP)—allows partners to enjoy limited personal liability, while general partners have unlimited liability
- S-corporation—meets specific Internal Revenue Code requirements, which gives a corporation with 100 or fewer employees the benefit of incorporation while being taxed as a partnership
- Franchise—business opportunity that allows the franchisee to start a business by legally using someone else’s (i.e., the franchisor’s) expertise, ideas, and processes
- Nonprofit corporation—formed to carry out a charitable, educational, religious, literary, or scientific purpose; does not pay federal or state income taxes from activities in which it engages to carry out its objectives
- Cooperative—an association of persons united voluntarily to meet common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled enterprise

Process/Skill Questions:

- What are the advantages and disadvantages of each type of business ownership?
- What is the difference between limited and unlimited liability? What effect does that difference have on the selection of a legal structure?
- Why do most business consultants encourage entrepreneurs to incorporate?
- What type of business ownership is the simplest and least expensive and is therefore the most common for start-up business owners?
- Which types of business ownership present the most risk? Why?
- How does purchasing a franchise allow an individual to operate a business with minimum risk?
- How are the goals of nonprofits different from the goals of other legal forms of business ownership?
- What are the legal steps for establishing a business in the local community?
- How does one become part owner of a corporation?
- What are the steps involved in starting the different types of business ownerships?
- What are the basic similarities between a sole proprietorship and a franchise business? What are the advantages of each over the other?