Business Organizations Miss Smith 7th grade Civics *pgs. 460-464

Sole Proprietorships A small business owned by one person Pros Cons You’re your own boss You decide the business hours You take all the profits Must have or borrow $$ to get a building/office space/equipment Must have $$ to pay employees Responsible for taxes Risk failure and debt What are some examples of sole proprietorships? Hair salons, drug stores, gas stations

Partnership A business in which two or more people share the responsibilities, costs, profits, and losses Why do you think some small business owners might set up a partnership instead of running the business as a sole proprietor? Less responsibility, more capital to start business

Corporations A type of business that is recognized as a separate legal entity from the people who own it A permanent organization (unlike proprietorships and partnerships)

How Corporations Function Raising Money Selling stock (or shares of ownership) The people who buy corporate stocks are stockholders Dividends are stockholders’ share of the profits

How Corporations Function Rights to Operate Certain laws must be followed to incorporate a business Incorporation allows a company to sell stocks

How Corporations Function Elected Directors Corporations must have meetings where stockholders can: Elect a board of directors Voice their opinions on how the company is structured The board of directors represents the stockholders when making decisions about the company

How Corporations Function Choosing Executives This is done by the board of directors Debt Responsibility If it goes out of business, to pay off debt, property will be sold

Nonprofit Organizations Organizations that provide goods and services without seeking to earn a profit for stockholders Ex: charities, research associations, educational programs