Kick off 2/10 If you could start a business what would it be? Would you have help or start it yourself? Where would you get the money to start the business?

Forms of Business Organizations Chapter 3 Section 1

I. Sole Proprietorships Def: A.Forming a Sole Proprietorship 1.Business license, fees 2.Ex: lemonade stand, lawn mowing business B.Advantages 1.Ease in starting up 2.Ease of management – you are the boss 3.No profit sharing – you keep what you make 4.Business is tax exempt 5.Psychological satisfaction – you are the boss 6.Ease of getting out of business – pay outstanding bill, stop offering goods and services C.Disadvantages 1.Unlimited liability – 2.Difficulty in raising financial capital 3.Lack of size and efficiency (employees and inventory) 4.Limited experience 5.Difficulty in attracting employees 6.Limited life –

II. Partnership Def: A.Types 1.General – 2.Limited – B.Forming a partnership 1.Articles of partnership – document specifying the terms of the partnership 2.Ex: Lawyers, Doctors, Accountants C.Advantages 1.Ease in establishment 2.Ease of management 3.No special taxes 4.Easier to attract financial capital 5.More efficient than sole proprietorship 6.Easier to attract employees D.Disadvantages 1.Unlimited liability 2.Partners are responsible for other partners’ actions 3.Limited life 4.Potential for conflict

III. Corporations Def: A.Forming a Corporation 1.File for permission 2.Charter granted 3.Ownership Stock – Stockholders, shareholders – Dividend – B.Corporate Structure 1.Common stock – gives holder voting rights 2.Preferred stock – no voting rights, but first to receive dividends

III. Corporations C.Advantages 1.Ease of raising financial capital 2.Professional managers 3.Limited liability 4.Unlimited life 5.Ease of transfer of ownership D.Disadvantages 1.Difficulty and expense of obtaining a charter 2.Owners have little say in day to day operations 3.Double taxation – 4.More government regulation (SEC)

IV. Government and Business Regulation A.Business Regulation 1.Protect the consumer 2.Control prices of some industries (electricity, water, etc) 3.Less regulation = more competition B.Business Development 1.Attraction of new industry by states (ex: Alabama and Hyundai) 2.Tourism