Types of Business Ownership Mrs. Alexander-Harrison’s Entrepreneurship Class

Basic types of business ownership

Sole proprietorships A sole proprietorship is a form of business ownership with one owner. It is the simplest type of business to form. You as a sole proprietor have complete control You receive all the profit Disadvantage you are responsible for all aspects of the business Disadvantage you are responsible for all losses/debt

Partnerships A partnership is a form of business ownership with two or more partners. Profits are split between the partnerships What is known as a general partnership is one in which each of the partners is liable for all of the firm’s debts, and the actions of one partner are binding on each of the other partners.

Corporations A business owned by a group of people and authorized by the state in which it is located to act as though it were a single person Complicated to form Ownership is in the form of stocks Board of Directors make important decisions, elects corporations officers. Officers to run daily business This is the most expensive form of business ownership Corporations are subject to much more government regulations than a sole proprietor or partnership

franchise A franchise usually involves less uncertainty and less risk than starting a business from scratch. Disadvantages to purchasing a franchise include extremely high start-up cost and royalty fees (examples of franchises are McDonalds; Pizza Hut; Dunkin Doughnuts)

Franchise Operating Costs of a Franchise Initial Franchise Fee: The fee the franchise owner pays in return for the right to run the franchise Royalty fees: Weekly or monthly payments made by the owner of the franchise to the seller of the franchise Advertising fees: Fees paid to support television, magazine, or other advertising of the franchise as a whole