Selecting a Business Structure Unit 3: Agribusiness Planning and Analysis Lesson: AP3

Objectives Lesson Objective: After completing the lesson on selecting a business structure, students will demonstrate their ability to apply the concept in real- world situations by obtaining a minimum score of 80% on their “My Business Structure” project. Enabling Objectives: Complete a comparison chart over the four types of business structures. .

Key Terms Sole proprietorship Partnership Corporation Cooperative

Let’s Start a Business…But What Kind? Sole Proprietorship or Individual Partnership Corporation Cooperative

Sole Proprietorship Partnership Corporation Cooperative Who uses these services? Non-owner customers Generally non-owner Generally non-owner customers Chiefly the owner-patrons Who owns the business? The individual The partners The stockholders The member-patrons Who votes and how is voting done? None necessary General partners only – usually by partner’s share in capital Common stockholders – by shares of common stock The member-patrons – one member, one vote or proportional to patronage Who is financially liable? Individual Partners or limited partner for amount invested Who determines policies? General partners only – not limited partner Common stockholders and directors The member-patrons and directors Are returns on ownership capital limited? No Yes – 8% or less Who receives profits? Partners in proportion to interest in business Stockholders in proportion to stock held Patrons on patronage basis How are they taxed? Individual files and pays Partnership files, but individual pays Corporation pays tax on profit; stockholders taxed on dividends Cooperative files but members pay based on patronage refund Identify 3 advantages Identify 3 disadvantages

Conclusion Agricultural businesses provide useful products and services to the community. These businesses can be structures as an individual proprietorship, a partnership, a cooperative, or a corporation. The type of structure will depend on individual situations and preferences.

Use the questions on the left to define the descriptions of each business structure. Who uses the services? Who owns the business? Who votes and how is voting done? Who determines price? Are returns on ownership capital limited? Who is financially liable? Who receives the profit? How are they taxed? Identify three advantages and explain why Identify three disadvantages and explain why Describe a sole proprietorship Describe a partnership Describe a corporation Describe a cooperative Which is the most common structure for a farm business? Which is the best structure for an agribusiness?

Exit Cards What did you learn today about business structures? What questions do you still have about business structures?