FORMS OF BUSINESS OWNERSHIP Options for Starting a business

Forms of Business  Proprietorship- Business owned and operated by just one person  Partnership- owned and controlled by two people  Corporation- separate legal entity formed by documents filed with a state

Choosing a Proprietorship  Work for yourself  You own everything and make all business decisions  Easy to start  Can use business expenses to lower personal income, therefore lowering taxes  In the eyes of the law, the business is the person  You’re responsible for any company debts with all business and person assets Pros Cons

Choosing a Partnership  Shared Liability  Shared contribution for startup and expertise  Easy to start  Each partner is responsible for the decisions of the other  No protection of personal assets of either partner ProsCons Partnership Agreement- written agreement among all partners

Discussion Activity  Discuss and post to todaysmeet.com/gossett4: Compare the interests and talents of the different members of your team. Identify possible businesses that could be formed as a partnership by combining the talents of two or more team members.

Choosing a Corporation  Personal protection. Corp and person are separate entity.  Not personally liable for corp debt  Can easily expand ownership through stock  Subject to many more laws  More difficult to form  Decision making is divided up (managers, B.O.D., shareholders)  Corporate Taxes on profit ProsCons To form a corporation, one must file articles of incorporation- written legal document that defines ownership, operating procedures, and conditions for the business

Specialized Types of Ownership  Limited Liability Partnership-  Limited Liability Partnership- Says some partners are not as liable as others, but cannot participate in day-to-day operations. (Difficult and costly to start)  Joint Venture-  Joint Venture- Allows two companies to operate as one for a limited time period to work on a project.  S Corporation-  S Corporation- Limited liability for corporation. Profits are split between owners and they are taxed individually on it  Limited Liability Corporation(LLC)-  Limited Liability Corporation(LLC)- Combines best elements of Part. and Corp. Protection for partners, but doesn’t need A.O.I., just partnership agreement  Nonprofit Corporation-  Nonprofit Corporation- Group of people that form a corporation to help the public. They don’t pay corporate taxes, but can not make a profit.

ORGANIZING MY BUSINESS

Things Needed to Organize a Business To inspire and nurture the human spirit—one person, one cup and one neighborhood at a time.  Mission Statement- Short, specific written statement of the reason a business exists and what it wants to achieve. Starbucks- To inspire and nurture the human spirit—one person, one cup and one neighborhood at a time.  Set of Goals- precise statement of results the business expects to achieve.  Policies- guidelines used in making consistent decisions.  Procedures- descriptions of the way work is to be done

Principles of Effective Organization  Responsibility  Authority- the right to make decisions about how responsibilities should be accomplished  Accountability- taking responsibility for results achieved  Unity of Command- clear reporting relationship for all staff of a business  Span of Control- Number of employees who are assigned to a particular work task and manager

Organizing Leadership  Organization Chart- Diagram that shows the structure of an organization, classifications of work and jobs, and the relationships among those classifications. PresidentVP of Finance VP or Operations VP of Marketing Senior Accountant Chief Auditor National Sales Manager Key Account Manager

Functional vs Matrix Organizational Structure  Arranged by business functions: production, operation, marketing, human resources  Pro: people work with others of the same skill set  Con: people can be more focused on their function more than the overall success of the business  People of different skills are placed together in order to complete a project  Can be temporary or long-term  Can be inefficient if strong leadership is not present. Functional Organizational Structure Matrix Organizational Structure

Discussion Activity  Discuss with your group and post to todaysmeet.com/gossett4: Your class is responsible for selling yearbook advertisements over the next three weeks. Work as a team to identify the tasks that will need to be completed to sell 50 ads in the next three weeks. Describe how a project team can be organized to achieve that goal.