Page 126 - DMGT310_ENTREPRENEURSHIP_AND_SMALL_BUSINESS_MANAGEMENT

Unit 8: Setting up a Small Business Enterprise

A final accounting and a division of assets and liabilities is generally necessary in such an Notes
instance unless specific methods under which the partnership may be continued have
been outlined in the partnership agreement.
Corporations are generally, a more complex form of business operation than either a sole
proprietorship or partnership.

The bylaws of the corporation outline the actual mechanics of the operation and
management of the corporation. There are two basic types of corporations: C-corporations
and S-corporations.

8.4 Keywords

C-corporation: It refers to any corporation that, under United States federal income tax law, is
taxed separately from its owners.
Creditors: A creditor is a party that has a claim on the services of a second party.
Limited Liability Company (LLC): A corporate structure whereby the members of the company
cannot be held personally liable for the company’s debts or liabilities.
Partnership: A partnership is a relationship existing between two or more persons who join
together to carry on a trade or business.

Personal Assets: A personal asset is something of value which belongs to some individual
personally.
S-corporation: The S-corporation is a certain type of corporation that is available for specific tax
purposes.
Sole Proprietorship: It is a type of business entity that is owned and run by one individual and
in which there is no legal distinction between the owner and the business.

Tax Benefit: A tax benefit is an allowable deduction on a tax return intended to reduce a taxpayer’s
burden while typically supporting certain types of commercial activity.

8.5 Review Questions

1. What do you mean by Small-scale industry?

2. Define Sole Proprietorship and discuss its advantages and disadvantages.
3. What are the pros and cons of starting a partnership firm?
4. Differentiate among the Limited Liability Company (LLC), Corporation and
S-corporation.
5. What do you understand by material index? Briefly explain.
6. Why there is a need for enterprise location?

7. What is partnership form of business? Briefly explain its advantages and disadvantages.
8. Give an introduction of Limited Liability Company (LLC).
9. Define corporations. What are the two types of corporations?
10. Briefly describe S-corporation.

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