Business Ethics
A sole proprietorship is a business that is owned and usually operated by one person. Sole proprietorship is the simplest for m of business and the easiest to start. Sole proprietorships have disadvantages. One disadvantage, for example unlimited liability which id a legal concept that holds a business owner personally responsible for all the debts of the business.
The U.S. Uniform Partnership act defines a partnership as voluntary association of two or more persons to act as co owners of a business for profit. All partners are not necessarily equal. Some may be active in running the business while other may have a limited role. There are types of partners. A general partner is a person who assumes full or shared responsibility operating a business. A general partnership is a business co-owned by to or more general partners who are liable for everything the business does. A limited partner is a person who contributes capital to a business but who has management responsibility or liability for losses beyond his or her investment in the partnership. Limited partnership is a business co-owned by to or more general partners who manage the business and the limited partner who invest money in it. A master limited partnership is a business partnership that is owned and managed like corporation but taxed like a partnership. An example is a NBA basketball team (Boston Celtics).
A corporation is an artificial person created by law, with most of the rights of a legal person, including the right to start and operate a business, to own property and to enter into contracts. The shares of ownership of a corporation is called stock, and the people who own a corporate stock are called stockholders or shareholders. A closed corporation is a corporation whose stock is owned by relatively few people and is not to the general public. A open corporation is a corporation whose stock is bought and sold on security exchanges and can be purchased by any individual. An example would be general motors. The forming a corporation is called incorporation. Incorporating a business does not guarantee success. An incorporated business is called a domestic corporation in the state it is incorporated. In all other states where it does business it is a foreign corporation. A corporate charter is a contract between the corporation and the state. The charter includes:
· Firms name and address
· Incorporators name and address
· Purpose of the corporation
· Maximum amount of stock and types of stocks issued
· Rights and privileges of stockholders
· Length of time corporation is to exist
There are two types of stocks. Common stocks is stock owned by individuals or firms who may vote on corporate matters, but whose claims on profit and assets are subordinate to the claims of others.