Business Structures

Two or more people share in the management, profits, and

risks of the business. Income is shared among them and is reported on personal tax

forms.

3 friends, who have worked together want to start their own firm. One is a Licensed architect and a great designer. The other two have experience in technical construction issues and are both excellent marketers. Their vision is to serve large institutional clients and grow the firm into providing service for international customers. Another goal of these owners is to protect their personal assets from potential lawsuits. What type of business organization would be best suited

for the three firm owners to meet these goals?

A _______ should be based on a formal, written agreement that describes the duties and responsibilities of each _____, how profits and losses will be divided, and how the work will be completed. It is treated like a partnership; it is not itself a legal entity independent from its members, and it cannot be sued

as a corporation can.

The primary disadvantages of a ______ are the initial cost to establish the business and the continuing paperwork and formal requirements necessary to maintain it. These, however, are usually outweighed by the reduced liability and tax benefits.

Stockholders are owners of the business.

Directors are responsible for broad policy decisions.

Officers carry out the day to day management.

Those who invest are called members, and those who manage are called managers.