how a firm’s owners benefit from profits and suffer from losses varies across different legal forms of business. each involves a different approach to dealing with profits and losses (table 9.10 “business forms”). from a legal perspective, the firm and its owner are considered one and the same. if a sole proprietor is on the losing end of a significant lawsuit, for example, the owner could find his personal assets forfeited. a partnership is similar to a sole proprietorship in that the partners are the only beneficiaries of the firm’s profits, but they are also responsible for any losses and debts. sander & lawrence is a partnership of two home builders in tallahassee, florida.

business organization is the single-most important choice you’ll make regarding your company. aligning your goals to your business organization type is an important step, so understanding the pros and cons of each type is crucial. the simplest and most common form of business ownership, sole proprietorship is a business owned and run by someone for their own benefit. the business’ existence is entirely dependent on the owner’s decisions, so when the owner dies, so does the business. to the business and are both 100% liable for business debts.

business agreement is differentiated from contract in such a way that it is a mutual understanding while a contract is an agreement between two or more parties.3 min read business agreements are often referred to as contracts, but they are not exactly the same thing. the first three relate to the agreement itself. the other three relate to the parties who create the contract. most agreements should be in writing even if not legally required. keep the legalese to a minimum. keep the verbiage clear and concise. when negotiating a business agreement, do not waste time with a person who does not have the authority to make a binding decision. identify each party in the contract using correct legal names to identify who has the responsibility for performing the obligations specified in the agreement.

the service agreement outlines the relationship between your company and the provider. the section that defines the payment terms is important and should include how much, when, and how the provider will receive compensation. typically, the provider will require a deposit to secure the services, and include a balloon payment or series of payments over the course of the service. this itemized statement should be included as an exhibit to the service agreement. the amendment section details how the parties can change the agreement if the circumstances (i.e. typically, written consent of both parties is required to amend the agreement.