CAREER PLANNING Types of Businesses and Benefits

1. What are the three major types of businesses? a. sole proprietorship b. partnership c. corporation

2. What is a sole proprietorship? owned by one person. More than 3/4 of businesses are these. Complete responsibility for all business decisions. Entitled to all of its profits and responsible for all of its debts.

3. What is a partnership? Business owned by 2 or more people, who agree to share in its profits

4. What is a corporation? The law regards it as an artificial being possessing the same rights and responsibilities as a person.

SOLE PROPRIETORSHIP Advantages Low start up costs Greatest freedom from regulation Owner in direct control of decision making Minimal working capital required Tax advantages to owner All profits to owner Owner is the boss Income is taxed as personal income Can discontinue at will Disadvantages Unlimited liability Lack of continuity in absence of owner Difficulty in raising capital

PARTNERSHIP Advantages Ease of formation Low start-up costs Additional sources of investment capital Possible tax advantages Limited regulation Broader management base Partners pay only personal income tax Disadvantages Unlimited liability Divided authority Difficulty in raising additional capital Hard to find suitable partners Possible conflict between partners Partners can legally bind other partners without prior approval Lack of continuity

CORPORATION Advantages Limited liability Possible tax advantage Specialized management Ownership is transferable Unlimited life Separate legal entity Easier to raise capital Disadvantages Closely regulated Most expensive form to organize Extensive record keeping necessary Double taxation of dividends

SMALL VS. LARGE BUSINESSES Small Business is one that is independently owned and operated and which is not dominant in its field of operation. Large Business is one that is not independently owned and operated and is dominant in its field of operation

LARGE BUSINESS Advantages Offer products at more affordable prices More benefits, paid vacations, sick time, maternity leave, etc Standardized job description Regular raises Room for advancement Health insurance Disadvantages Create many jobs, but many are outsourced Create a lot of revenue but distributed among a few at the top Follow a set system Not always room for creative fulfillment

BENEFITS Employee Health Plans Employee Insurance Employee Leave Employee Retirement Income Security Act Employee Stock Ownership Plans

BENEFITS Executive Compensation Maternity and Paternity Benefits Pension and Retirement Plans Wages and Salaries Workplace Programs

Employee Health Plans Dental, vision and prescription insurance Disability insurance Group health insurance Long-term care insurance Retiree health plans

Employee Insurance Company owned life insurance Directors and Officers Liability insurance Health Insurance Unemployment insurance

Employee Leave Family medical leave act Maternity leave Paternity leave Sick leave

Pension and Retirement Plans 401(k) Defined benefits plan IRA Keogh

Wages and Salaries Average earnings Commission pay Minimum wage Severance pay

Employee Benefits Optional, non-wage compensation provided to employees in addition to their normal wage or salaries.

Why Offer Your Employees Benefits? To attract and hold capable personnel To keep up with competition To foster good morale To provide opportunities for advancement and promotion as older workers retire

Financial Benefits Health care Dental Care Life and Accidental Death or Dismemberment Long term disability Employee Assistance Plans Retirement Benefits Pension Plans Prescriptions Vision Care

Financial Benefits (cont’d) Adoption Assistance Bereavement leave Company car Daycare Vacation and Holidays (paid) Maternity/Paternity Leave Relocation Assistance Stock Tuition Reimbursement

Nonfinancial Benefits Professional Development Workplace Flexibility Flexible Time Compressed work week Job Sharing Telecommuting Part Time Educational partnership

Nonfinancial Benefits (cont’d) Employee discounts Discounts with local merchants Local dry cleaner pickup and delivery Lunch time seminars Credit union membership On site gym

Mandatory Benefits Social Security Unemployment Insurance Workers’ Compensation Minimum Wage Overtime Pay