Introduction to Business Chapter 6 Pages 89, 94-98 Business Structures

Three Major Types of Business Ownership Sole Proprietorship Partnership Corporation

Sole Proprietorship Business owned by one person More than 2/3 of U.S. businesses are operated as this Sole proprietor has complete responsibility for all business decisions

Partnership Owned and managed by a small group, often not more than two or three people Share profits and losses and have unlimited liability for the debts of their business Articles of Partnership is drawn up by a lawyer/attorney (see page 94 in the book)

Corporation Owned by a number of people Operated under written permission from the state in which it is located; called certificate of incorporation Corporation acts as a single individual on behalf of its owners Owners are shareholders or stockholders

Corporation Corporation is a legal entity Board of Directors guide the operations of a corporation (see page 97 in the book) Each owner receives a profit from the corporation, otherwise known as the dividend A legal entity is when the business’ existence and life are separate from the owners. Dividend is calculated the following way: 1. Profit divided among the owners 2. Profit divided by # of shares, which equals the profit for each share 3. Profit for each share multiplied by the number of shares each owner owns

Advantages & Disadvantages Sole Proprietorship Partnership Corporation See page 99 in the book! If you were to start a business which kind would it be? Why?

Non-Profit Corporation AKA- Municipality or Municipal Corporation Incorporated towns- Mt Horeb, Middleton Their own police, schools, fire department Uses the money from taxes to provide services Non-Profit Organizations -The Red Cross - DECA

Franchise Defined: Written contract granting permission to sell someone else’s product or service in a prescribed manner, over a certain period of time and in a specified territory Can be operated as a sole proprietorship, partnership or corporation

Franchise Franchisor Easy business to start Franchisee person or group of people who received the franchise from a parent company Franchisor parent company granting the franchise Easy business to start Usually requires a large investment of capital to start

Cooperative Owned by the members it serves and is managed in their interest Consumer’s Cooperative Producer’s Cooperative Formation must be approved by the state May sell one or more shares of stock to each of its members Board of directors may be chosen