Chapter 20 Preparing for Your Career 585 Copyright Goodheart-Willcox Co., Inc. In a sole proprietorship, one person owns the company (Figure 20-6). This person is responsible for all of the company’s debts. Sole proprietorships are the easiest type of business to start because one person makes all the decisions. Most entrepreneurs are sole proprietors because sole proprietorships are the least complicated type of business to form. This adds an additional level of risk, however. If the business is not successful, the entrepreneur is personally responsible for all debt incurred by the business. Nevertheless, many sole proprietors are both successful and happy with their career choice. By planning carefully and investing wisely in their companies, they overcome any disadvantages and enjoy their independence. A partnership is a business owned by two or more people. These people draw up a contract that specifi es each person’s responsibilities. The contract also specifi es how profi ts will be shared, how disputes will be settled, and how much money each person will contribute to the company. It may also specify how they will close the company and divide the assets, should the need arise. A corporation is a legal entity that is not tied to a specifi c owner or handful of owners. Instead, it is owned by stockholders (people who buy stock, or shares, of the company). Large corporations may have thousands of stockholders. The stockholders elect a board of directors to make decisions and manage policies (Figure 20-7). Roman Samborskyi/Shutterstock.com Figure 20-6. The sole proprietor of a company makes all decisions and must be highly motivated. Monkey Business Images/Shutterstock.com Figure 20-7. A corporation’s board of directors is responsible for making major decisions about product lines, investments, and other company matters.