1. The three general forms of business ownership are: 1- sole proprietorships (single owner); 2- partnerships (multiple owners); 3- corporations (potential for widespread ownership often with separation of ownership and management).

2. Some advantagesa nd disadvantageso f eachb usinessf orm are:

Transcribed Image Text:

Advantages: Disadvantages: Sole Proprietorship Owner control Taxes flow to proprietor's income Owner is liable for all business decisions Often difficult to raise capital Partnership Owners control Taxes flow to partners' income Partners are liable for all business decisions Often difficult to raise capital Corporation Limited liability for owners Often easier to raise capital For owners, they may diversify their investments across many different companies, often for a very small investment Often, management and owners are separate, creating a conflict of interests Corporation pays taxes and then owners pay taxes again on the dividends they receive (unless the tax law makes dividends exempt from tax)