Professional Documents
Culture Documents
A firm is a business organization, such as a corporation, limited liability company or partnership, that
sells goods or services to make a profit. While most firms have just one location, a single firm can
consist of one or more establishments, as long as they fall under the same ownership and, typically
utilize the same Employer Identification Number (EIN). The title "firm" is typically associated with
business organizations that practice law, but the term can be used for a wide variety or business
operation units, such as accounting. "Firm" is often used interchangeably with "business" or
"enterprise."
Sole Proprietorship
Partnership
Corporation
Sole Proprietorship
Usually small
Partnership
A partnership with two kinds of owners: General partners and limited partners.
General Partners - Have the same rights and privileges as partners in any general partnership.
A limited partnership without a general partner. Owners are referred to as members and have
limited liability.
Corporation
A legally defined, artificial being, separate from its owners. Limited Liability
Artificial Being
C Corporation
Corporations that have no restrictions on who owns their shares or the number of shareholders; they
cannot quality for subchapter S tax treatment and are subject to direct taxation. (subject to double
taxation)
S Corporation
Those corporations that elect subchapter S tax treatment and are exempted by the U.S. Internal
Revenue Service's tax code from double taxation. (They don't pay corporate taxes)
Dividend Payments
Stock
The value of a commodity or an asset to the firm or its investors is determined by its competitive
market price. The benefits and costs of a decision should be evaluated using those market prices.
When the value of the benefits exceeds the value of the costs, the decision will increase the market
value of the firm.
1. Easy to setup
Advantages of a Corporation
Disadvantages to a partnership