Summary Entrepreneurial Finance Save

Entrepreneurial Finance



Save




Entrepreneurial Finance (Definition/Components) - (correct Answer) -

Entrepreneurship



Entrepreneur - (correct Answer) - Entrepreneurship: process of changing ideas into commercial
opportunities and creating value



Entrepreneur: Indvidual who thinks, reasons, and acts to convert ideas into commercial opportunities
and create value

Entrepreneurial Traits - (correct Answer) - Successful Entrepreneur:

1.) sees/seizes commercial opportunity

2.) Tends to be doggedly optimistic

3.) Plans to obtain physical, capital, and human resources necessary to make new venture successful;

4.) Drive/Desire to work harder than employee

Proprietership

1.) Number of Owners and Ease of Startup, 2.) Investor Liability 3.) Equity Capital Sources, 4.)Firm Life
and Liquidity of Ownership, 5.)Taxation - (correct Answer) - Proprietorships - business venture owned by
an individual who is personally liable for the venture's liabilities

1.) Number of Owners and Ease of Startup: one; low time and legal costs

2.) Investor Liability: Unlimited

3.) Equity Capital Sources: Owner

4.)Firm Life and Liquidity of Ownership: life determined by owner; often difficult to transfer ownership

5.)Taxation: personal tax rate

Partnership

, 1.) Number of Owners and Ease of Startup, 2.) Investor Liability 3.) Equity Capital Sources, 4.)Firm Life
and Liquidity of Ownership, 5.)Taxation - (correct Answer) - General - business venture owned by two or
more individuals who are jointly and personally liable for the venture's liabilities

1.) Number of Owners and Ease of Startup: one; low time and legal costs

2.) Investor Liability: unlimited (joint & several liability)

3.) Equity Capital Sources: partners, families, and friends

4.)Firm Life and Liquidity of Ownership: life determined by partners; often difficult to transfer ownership

5.)Taxation: personal tax rates

Limited Partnership

1.) Number of Owners and Ease of Startup, 2.) Investor Liability 3.) Equity Capital Sources, 4.)Firm Life
and Liquidity of Ownership, 5.)Taxation - (correct Answer) - limits limited partner liabilities in a
partnership to the amount of their equity capital contribution to the partnership

1.) Number of Owners and Ease of Startup: one or more general and one or more limited partners;
moderate time/legal cost

2.) Investor Liability: limited partners' liability limited to their investment

3.) Equity Capital Sources: General & Limited partners

4.)Firm Life and Liquidity of Ownership: life determined by general partner; often difficult to transfer
ownership

5.)Taxation: personal tax rates

C Corporations

1.) Number of Owners and Ease of Startup, 2.) Investor Liability 3.) Equity Capital Sources, 4.)Firm Life
and Liquidity of Ownership, 5.)Taxation - (correct Answer) - a legal entity that separates personal assets
of the owners (shareholders) from the assets of the business

1.) Number of Owners and Ease of Startup: one or more, with no limit; high time and legal cost

2.) Investor Liability: Limited to shareholder investments

3.) Equity Capital Sources: venture investors and common shareholders

4.)Firm Life and Liquidity of Ownership: unlimited life; generally easy to transfer ownership

5.)Taxation: corporate tax rate, dividends subject to personal tax rate

S (or subchapter S) Corporations

1.) Number of Owners and Ease of Startup, 2.) Investor Liability 3.) Equity Capital Sources, 4.)Firm Life
and Liquidity of Ownership, 5.)Taxation - (correct Answer) - provides limited liability for shareholders;