Business Organization

Have you ever thought about starting your own business Have you ever thought about starting your own business? If you were your own boss, what type of business could you see yourself running 5, 10 ,15 years from now?

Sole Proprietorship A business owned and managed by a single individual. 75% of all businesses 6% of sales. (67% make less than $25k). Examples- Bike shop, barber, gardener, bakery.

Sole Proprietorship Positive Full control. Start-up costs low (business license). Relatively few regulations. Full receiver of profits. Taxation. Easy to discontinue.

Sole Proprietorship Negative Unlimited liability. (Need liability insurance!) Limited capital ($) for expansion. Lack of permanence

General v. Limited Partners ??? Partnerships A business organization owned by two or more persons. 7% of all businesses. 5% of all sales. General v. Limited Partners ??? What’s the difference??

Partnerships Positive Low start-up costs Shared decision making. Specialization/complimentary qualities. Larger pool of assets = expansion. Taxation- income/loss pass thru to partners based upon % ownership they report on personal income tax return.

Partnerships Negative Unlimited liability. Potential for conflict.

Corporations A legal entity, or being, owned stockholders. 20% of all businesses. 90% of all sales. Examples: Wells Fargo, UPS, Disney, Wal-Mart.

Corporations Positives Limited liability. Capital investment and expansion easy w/stock offering (sell stock to public) Stockholders do not carry responsibility for corporation’s actions. Easy to raise money to purchase capital. Long life.

Corporations Negative Difficult and expense of start-up. Double taxation. “C Corp.” (Corporate and Individual) Loss of Control = Stockholders. More regulations.

Corporate Hybrids S-Corporations- is a closely held corporation, offers the owners limited liability protection. cannot be more than 100 shareholders S corporation can be converted to a C corporation easily- if I want to go Public or issue more shares of stock. Not double taxed, income/ losses passed thru to shareholders.

Hybrids cont. LLC- Limited Liability Company- These operate like a sole P or partnership but will LL. Some hoops to jump thru. LLP- Limited Liability Partnership Examples- Doctor, Lawyer, Accountant

Franchise A semi-independent business that pays fees to a parent company. The franchisee is granted the exclusive right to sell a certain product or service in a given area. Franchisee must pay royalties to parent company.

Franchise Positives Built-in reputation/brand recognition. Management and training support. Standardized quality. National advertising. Buying power.

Franchise Negatives High franchise/royalty fees Strict operating standards. Purchasing restrictions. Limited product line. REMEMBER YOU WILL STILL NEED TO INCORPORATE YOUR END OF THE FRANCHISE.

Corporation Combinations Horizontal Merger – The joining of two or more firms competing in the same market with the same good or service.

Vertical Merger – The joining of two or more firms involved in different stages of producing the good or service.

Conglomerate – The joining of companies that produce entirely different products.

http://dos.myflorida.com/sunbiz/ Searchable data base of organizations in the State of Florida Bevs Better Burgers of Alachua- LLC Alachua Farm and Lumber-Corp Smoke Fried- LLC

Kahoot https://kahoot.com/welcomeback/

Match the Characteristics Use of Personal Savings and Investments Board of Directors Can Be a Hybrid Lasts for a Fixed Period of Time (5-30 years) Life of Partnership Limited Documents of Disclosure Secure Financing More Easily Quick Start Up Complimentary Skills Royalty Fees Easy to Form Unlimited Liability Limited Liability for Investors Articles of Partnership Few Government Regulations Must Issue Stock Articles of Incorporation Recognizable Brand Long Work Hours Stricter Regulations Needs Accurate Tax & Employee Records