Types of Business Ownership Chapter 3 If you owned a small business, what type of business ownership would best suit your needs and future goals?

3 Types of Business Ownership Chapter 3 Understanding and selecting the proper form of organization for your business can be an essential factor in its success.

Employer Identification Number (EIN) unlimited liability limited life Types of Business Ownership Chapter 3 public sector private sector competition price competition nonprice competition market oligopoly monopoly profit sole proprietorship entrepreneur Employer Identification Number (EIN) unlimited liability limited life partnership partnership agreement general partner limited partner cooperative corporation articles of incorporation

limited liability company (LLC) franchise Types of Business Ownership Chapter 3 corporate bylaws corporate charter board of directors limited liability company (LLC) franchise

Types of Business Ownership Chapter 3

Describe the effects of competition on businesses and consumers. Types of Business Ownership Chapter 3 Section 1 Private Enterprise and Business Ownership Describe the effects of competition on businesses and consumers. Explain how competition impacts the consumer. Identify the advantages and disadvantages of a sole proprietorship. Explain the differences between general and limited partners. Identify the advantages and disadvantages of a partnership. Identify the advantages and disadvantages of a cooperative.

Private Enterprise System Types of Business Ownership Chapter 3 Section 1 Private Enterprise and Business Ownership Private Enterprise System Public schools are part of the public sector. Your local supermarket is part of the private sector. public sector government-funded services private sector business not funded by the government

Private Enterprise System Types of Business Ownership Chapter 3 Section 1 Private Enterprise and Business Ownership Private Enterprise System Two Types of Competition Excellent service and quality construction are examples of nonprice competition. Discounts and coupons are examples of price competition. competition the struggle among businesses for customers price competition struggle for business that assumes consumers will choose the lowest priced products available nonprice competition struggle for business that relies on factors other than price to attract and keep customers

Private Enterprise System Types of Business Ownership Chapter 3 Section 1 Private Enterprise and Business Ownership Private Enterprise System market field of exchange that takes place between buyers and sellers Market oligopoly market condition characterized by the existence of a few large businesses in a market Levels of Competition Monopoly Oligopoly monopoly market condition characterized by the existence of only one supplier in a market

Private Enterprise System Types of Business Ownership Chapter 3 Section 1 Private Enterprise and Business Ownership Private Enterprise System Competition Economic Changes Government Regulations Risks of Doing Business New Technologies Natural Disasters Lawsuits

Private Enterprise System Types of Business Ownership Chapter 3 Section 1 Private Enterprise and Business Ownership Private Enterprise System Who benefits when a business makes a profit? Employees The government (taxes) The economy Other businesses Society profit the money left after paying the expenses of doing business

Business Ownership Organization Types of Business Ownership Chapter 3 Section 1 Private Enterprise and Business Ownership Business Ownership Organization Three Legal Forms of Business Ownership Sole Proprietorship Partnership Corporation

A sole proprietorship is usually started by an entrepreneur. Types of Business Ownership Chapter 3 Section 1 Private Enterprise and Business Ownership Sole Proprietorship A sole proprietorship is usually started by an entrepreneur. sole proprietorship business owned by one person entrepreneur individual who takes the risk of starting a new business

Advantages of Sole Proprietorship Types of Business Ownership Chapter 3 Section 1 Private Enterprise and Business Ownership Sole Proprietorship Advantages of Sole Proprietorship Easy Setup Licensing and Paperwork – Employer Identification Number (EIN) Total Control Profits to Owner Profits Taxed Once Few Government Regulations Employer Identification Number (EIN) number assigned by the IRS used for income tax purposes

Disadvantages of Sole Proprietorship Types of Business Ownership Chapter 3 Section 1 Private Enterprise and Business Ownership Sole Proprietorship Disadvantages of Sole Proprietorship Limited Capital Unlimited Liability Limited Human Resources Limited Life unlimited liability situation in which the owner of a business is responsible to pay the business debts out of personal assets limited life situation in which a business’s life span or existence is determined by the owner’s life span or decision to terminate the business

A partnership requires a partnership agreement. Types of Business Ownership Chapter 3 Section 1 Private Enterprise and Business Ownership The Partnership A partnership requires a partnership agreement. partnership business owned by two or more persons partnership agreement written document that states how a partnership will be organized

General Partner Limited Partner Types of Business Ownership Chapter 3 Section 1 Private Enterprise and Business Ownership The Partnership Two Types of Partners General Partner Limited Partner general partner business partner who has decision-making authority, takes an active role in the operation of the business, and has unlimited liability limited partner business partner who does not take an active role in decision making or in running the business

Advantages of a Partnership Types of Business Ownership Chapter 3 Section 1 Private Enterprise and Business Ownership The Partnership Advantages of a Partnership Easy Setup More Skills and Knowledge Available Capital Total Control by Partners Profits Taxed Once

Disadvantages of a Partnership Types of Business Ownership Chapter 3 Section 1 Private Enterprise and Business Ownership The Partnership Disadvantages of a Partnership Unlimited Liability Possible Disagreement Among Partners Shared Profits Limited life

The Partnership 3 Types of Business Ownership Section 1 Chapter 3 Section 1 Private Enterprise and Business Ownership The Partnership

Advantages of a Cooperative Types of Business Ownership Chapter 3 Section 1 Private Enterprise and Business Ownership The Cooperative Advantages of a Cooperative Each member has an equal vote Each member has some control over the business Saving money on purchases Pooled resources cooperative an organization that is owned and operated by its members

Disadvantages of a Cooperative Types of Business Ownership Chapter 3 Section 1 Private Enterprise and Business Ownership The Cooperative Disadvantages of a Cooperative All decisions must be approved Limited flexibility Slow decision-making Limited capital Retaining and recruiting new members

3 Types of Business Ownership Section 1 Chapter 3 Section 1 Private Enterprise and Business Ownership You are starting your own business repairing bicycles. Your uncle is supplying money for start-up costs. Decide whether your uncle should be a general partner or limited partner. Sample response: My uncle should be a limited partner so that I can control the business and he will not lose additional money if my venture does not work.

Describe two types of corporations. Types of Business Ownership Chapter 3 Section 2 The Corporation Describe two types of corporations. Summarize the process of forming a corporation. Discuss the advantages and disadvantages of a corporation. Discuss the advantages and costs of a franchise.

Types of Business Ownership Chapter 3 Section 2 The Corporation What Is a Corporation? About 20 percent of businesses in the United States are organized as corporations, but they produce about 90 percent of the total business revenue in the United States. corporation business organization that operates as legal entity that is separate from its owners and is treated by law as it if were an individual person

Starting a Corporation Types of Business Ownership Chapter 3 Section 2 The Corporation Starting a Corporation Articles of Incorporation Paperwork and Documents Corporate Bylaws Corporate Charter articles of incorporation an application to operate as a corporation corporate bylaws rules by which a corporation must operate corporate charter a license to operate a corporation

Starting a Corporation Types of Business Ownership Chapter 3 Section 2 The Corporation Starting a Corporation Shares of stock in a corporation are bought by people who become known as stockholders.

Starting a Corporation Types of Business Ownership Chapter 3 Section 2 The Corporation Starting a Corporation Two Types of Corporations Closely Held Corporation Publicly Held Corporation

Starting a Corporation Types of Business Ownership Chapter 3 Section 2 The Corporation Starting a Corporation Advantages of the Corporation Ability to raise capital Limited liability Continued life Separation of ownership and management – Board of directors Individuals Organizations board of directors group of individuals who are responsible for overseeing the general affairs of a corporation

Starting a Corporation Types of Business Ownership Chapter 3 Section 2 The Corporation Starting a Corporation Disadvantages of the Corporation Complex and expensive setup Slow decision-making process Taxes Individuals Organizations

Starting a Corporation Types of Business Ownership Chapter 3 Section 2 The Corporation Starting a Corporation

Limited Liability Company Types of Business Ownership Chapter 3 Section 2 The Corporation Limited Liability Company A limited liability company (LLC) combines some advantages of both the partnership and the corporation. limited liability company (LLC) a business that operates and pays taxes as a partnership but has limited liability for the owners

Types of Business Ownership Chapter 3 Section 2 The Corporation Franchise If you start a franchise, you first organize your business as a sole proprietorship, partnership, corporation, or LLC. franchise a contractual agreement to sell a company’s products or services in a designated geographic area

Choosing the Form of Ownership Types of Business Ownership Chapter 3 Section 2 The Corporation Choosing the Form of Ownership Carefully consider the advantages and disadvantages of each form of ownership A sole proprietorship or partnership may be best for a small start-up

3 Types of Business Ownership Section 2 The Corporation Chapter 3 Section 2 The Corporation It is now possible to buy “do-it-yourself” incorporation kits. Judge whether you think this is a good idea or if an attorney should be used to handle the legal aspects of incorporating. The kit may have all the forms, but you may not understand how to complete them.

Economic Systems 3 Types of Business Ownership Command Economy Chapter 3 Economic Systems Government makes the economic decisions of Command Economy What to produce How it should be produced For whom it should be produced Market Economy The three economic decisions are made in the marketplace.

Types of Business Ownership Chapter 3

Types of Business Ownership Chapter 3

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