For Reals Today: Business Organizations Types of Businesses Videos: Shark Tank But first… https://www.youtube.com/watch?v=OGR_EgWfXfI
The Role of Sole Proprietorships business organization: An establishment formed to carry on commercial enterprise. sole proprietorship: A business owned and managed by a single individual
Characteristics of Proprietorships Most sole proprietorships earn modest incomes. Many proprietors run their businesses part-time.
Advantages: Sole Proprietorships Relatively Few Regulations Sole Receiver of Profit Full Control Easy to start/discontinue Least expensive Maybe subject to zoning laws: law in a city or town that designates separate areas for residency and for business.
Disadvantages of Sole Proprietorships limited access to resources, such as physical capital. lack permanence. Most don’t offer fringe benefits: payment other than wages and salaries. Unlimited liability. Liability: the legally bound obligation to pay debts. Inventory Limited life
Types of Partnerships Partnership: a business organization owned by two or more persons who agree on a specific division of responsibilities and profits. Partnerships fall into three categories: General Partnership In a general partnership, partners share equally in both responsibility and liability. Limited Partnership In a limited partnership, only one partner is required to be a general partner, or to have unlimited personal liability for the firm.
Some Advantages of Partnerships Partnerships offer entrepreneurs many benefits. 1. Ease of Start-Up 2. Shared Decision Making and Specialization 3. Larger Pool of Capital 4. Taxation Not subject to business taxes
Disadvantages of Partnerships Unless the partnership is a limited liability partnership, at least one partner has unlimited liability. General partners are bound by each other’s actions. Potential for conflict.
Corporations TERMS Charter Stock Stockholders Dividend Common stock Preferred stock
Advantages/Disadvantages Bond double taxation Principal interest
Business Franchises business franchise is a semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area. Franchisers develop products and business systems, then local franchise owners help to produce and sell those products. Franchises allow owners a degree of control, as well as support from the parent company. Franchisor franchisee