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Learning Unit 3 (Legal forms of Ownership (Sole Proprietorship (Simple to…
Learning Unit 3
Legal forms of Ownership
Sole Proprietorship
Simple to create
Cheapest way of starting a business
Owner has total decision-making control
No special Legal Restrictions
Easy to discontinue
Owner liable without limitations
Limited skills and Capabilities
Limited access to capital
Lack of continuity
Partnership
Ease of formation
Diversification of skills and abilities
Legal people may be partners
Increased opportunity for capital
Minimal legal formalities and regulation
Personal liability of partners
Partnership will terminate in change of ownership
Conflict
Lack of continuity.
Close Corporation
Separate Legal personality
Members have limited Liability
Increase capital-acuistioning
Management is simple
Enjoys Continuity
Members both own and control the close corporation
High degree of legal regulation.
High Operational costs.
Business Trust
Ease of info
Legal people may be parties
Limited Liability
Extreme Flexibility
Limited Access to capital
Potential conflict between parties
Developing a business plan
1.Identify the business opportunity.
Present a written plan.
Attract Investors.
Stakeholders
Internal
Management
Emplyees
External
Customers
Investors
Banks
4C's
Capital
Collateral
Character
Conditions