Forms of Business Organizations Chapter 3 Section 1

Sole Proprietorships (or Proprietorships) The most common form of business in the US One person owns and operates the business It is the easiest business to set up Only licenses and the fees associated are required Can be run by most any means Internet Store front Yard work Etc…

Partnerships Business jointly owned by two or more people General Partnerships All partners are responsible for operations and management Limited Partnership At least one partner is not active in the operations of the business but has contributed financially Limited liability: limited partner is only responsible for investments into the company

Partnerships continued Partnerships can take many different forms, including the same forms of a proprietorship

Corporations Has the same legal rights as an individual Can buy and sell property Can enter into contracts Can be sued Make up over 90% of all US sales Examples: Exxon Mobil, Chevron, Microsoft, General Electric, Wal-Mart, Johnson and Johnson, AT & T, IBM, Air Fraga’s will be on this list soon. Very soon!!

Corporations (continued) Must apply to receive a Charter from the state This gives the company legal rights to incorporate Shareholders buy Stocks in the corporation These shareholders are owners and only responsible for the money they invested to buy the stocks. (Shareholders cannot be sued).

Air Fraga’s Business Organization Which organization would be best for AF’s? Why? What would be the biggest Disadvantage?

Real Life Goal Scenarios Open an establishment with two friends All three put in the same amount of money All three manage equally What type of organization is this? General Partnership What if one of the partners only gives money and shares in the profits? Limited Partnership