Professional Documents
Culture Documents
by Henry R. Cheeseman
Entrepreneur A person who forms and operates a new business either by him- or herself or with others.
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Corporation
Sole Proprietorship
A
form of business where the owner is actually the business. The business is not a separate legal entity. Sole proprietorships are the most common form of business organization in the United States.
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A sole proprietorship is not a separate taxpaying entity for federal income tax purposes.
A sole proprietor need not file an informational return with the Internal Revenue Service (IRS).
Income and losses are reported on the sole proprietors personal income tax return.
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ease and low cost of formation. The owners right to make all management decisions concerning the business.
The
sole proprietor owns all of the business and has the right to receive all of the businesss profits.
Copyright 2004 by Prentice-Hall. All rights reserved. 31 - 7
sole proprietorship can be easily transferred or sold if and when the owner desires to do so.
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sole proprietors access to capital is limited to personal funds plus any loans he or she can obtain. The sole proprietor is legally responsible for the businesss contracts and the torts committed by the proprietor and his or her employees in the course of employment.
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The owner will lose his or her entire capital contribution if the business fails.
The
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may recover claims against the business from the sole proprietors personal assets. The law holds that a sole proprietorship is not a distinct legal entity. The sole proprietorship and the sole proprietor are one and the same.
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Third Party
simplest form of conducting international business is to engage in direct export or import sale. The main benefits of conducting international business this way are:
It is inexpensive It usually involves just entering into contracts
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Companies wishing to do business in a foreign country often appoint a local agent or representative to represent them in that country.
Sales Representative may solicit and take orders for his or her foreign employer.
Does
Sales Agent may enter into contracts on behalf of his or her foreign employer.
Copyright 2004 by Prentice-Hall. All rights reserved. 31 - 14
foreign distributor is generally used when a company wants a greater presence in a foreign market than is possible through a sales agent or representative.
A local firm separate and independent from the exporter. Usually given an exclusive territory. Takes title to the goods and makes a profit on the resale of the goods in the foreign country.
Office used where a corporation wants to enter a foreign market in a substantial way but wants to retain exclusive control over the operation.
It is not a separate corporation or legal entity. It is an extension of the corporate owner. It is wholly owned by the home corporation.
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No limited liability shield Corporation A in Country A is liable for the tort and contract liabilities of its branch office in Country B. Branch
Subsidiary Corporation A separate corporation established by the parent corporation to conduct business in a foreign country.
Must be formed pursuant to the laws of the country in which it is to be located. The parent corporation and the subsidiary organization are separate legal entities that are individually capitalized.
Limited liability shield Corporation A in Country A is not liable for the tort and contract liabilities of its subsidiary corporation in Country B except up to its capital contribution in Corporatio Corporation B. n B (in
Country B)