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Life Insurance Part 1
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Business:
A Business can be defined as an organization established for the purpose of producing goods or services that customers want or need and then selling those goods or services, typically for a profit.
Profit:
Profit is the money, or revenue, that a business receives products or services minus the costs it incurred to produce the goods or deliver the services.
Organization Structure:
- Sole proprietorship:
A Sole Proprietorship is owned and operated by one individual. The owner reaps all profits and is personally responsible for all debts.
Demerits:
a) If the business fails, the owner’s personal property may be used to pay the debt’s of the business.
b) If the owner becomes disabled or dies, the business usually closes its doors.
- Partnership:
A partnership is a business that is owned by two or more people, who are known as the partners. The partners reap the profits and are personally responsible for the debts of the business.
Demerits:
If one of the partners dies or withdraws from the business, the partnership generally dissolves, although the remaining partners may form a new partnership.
- Corporation:
A corporation is a legal entity that is created by the authority of a governmental unit and that is separate and distinct from the people who own it.
Merits:
a) The corporation debt’s and liabilities belong to the corporation itself, not to its owners.
b) A corporation continues beyond the death of any or all its owners.
c) Corporation provides an element of stability and permanence.