What is Entrepreneurship?

What is Entrepreneurship An individual who undertakes the creation, organization, and ownership of an innovative business with potential for growth Entrepreneurship The process of recognizing or creating an opportunity, testing it in the market, and gathering the resources necessary to go into business

Benefits to Society Contributions made by Entrepreneurs to society Recognize consumer wants and needs—turn demand into supply Create a market for venture capitalists Provide jobs for communities Can change society Steve Jobs, Mark Zuckerberg What Entrepreneurs Contribute To Society(Video)

Rewards and Risks Competition Long Hours Uncertain Income Be your own boss Do something you enjoy Express creativity Set your own schedule Job security Potential for greater income Competition Long Hours Uncertain Income Full Responsibility May lose investment

What Makes a Successful Entrepreneur? Characteristics of a successful entrepreneur (not an exhaustive list!) Confident Determined Resourceful Responsible Goal oriented Creative Flexible Self motivated Risk taker Online Personality Quiz

Rewards and Risks Competition Long Hours Uncertain Income Be your own boss Do something you enjoy Express creativity Set your own schedule Job security Potential for greater income Competition Long Hours Uncertain Income Full Responsibility May lose investment

What Makes a Successful Entrepreneur? Characteristics of a successful entrepreneur (not an exhaustive list!) Confident Determined Resourceful Responsible Goal oriented Creative Flexible Self motivated Risk taker Online Personality Quiz

Sole Proprietorship The easiest and most popular form of business ownership is the sole proprietorship. sole proprietorship a business that is owned and operated by one person

The owner of a sole proprietorship: receives the profits, incurs any losses, and is liable for the debts of the business.

Sole Proprietorship In a sole proprietorship the owner must decide how much liability protection he or she needs. liability protection insurance against the debts and actions of a business

Advantages Sole Proprietorship Sole proprietorship is easy and inexpensive to create. The owner has complete authority over all business activities. It is the least regulated form of business ownership. The business pays no taxes; income is taxed at the personal rate of the owner. 11

Disadvantages Sole Proprietorship The owner has unlimited liability. Raising capital is more difficult. The business is totally reliant on the skills and abilities of the owner. The death of owner dissolves the business unless there is a will to the contrary. 12

Disadvantages The biggest disadvantage of a sole proprietorship is financial. In this form of business ownership, the owner has unlimited liability. unlimited liability full responsibility for all debts and actions of a business

Partnerships partnership A partnership draws on the skills, knowledge, and financial resources of more than one person. partnership an unincorporated business with two or more owners who share the decisions, assets, liabilities, and profits

Advantages Partnerships Partnerships are inexpensive to create. General partners have complete control. Partners can share ideas. Partners can secure investment capital more easily and in greater amounts. 15

Disadvantages Partnerships It is difficult to dissolve one partner’s interest without dissolving the partnership. There may be personality conflicts. Partners can be held liable for each others’ actions. 16

The Main Idea In a corporation, the owners of the business are protected from liability for the actions of the company.

What Is a Corporation? There are three types of corporations: C-corporation Subchapter S corporation nonprofit corporation corporation a business that is registered by a state and operates apart from its owners; it issues shares of stock and lives on after the owners have sold their interest or passed away

C-Corporation A C-corporation is the most common corporate form. an entity that pays taxes on earnings; its shareholders pay taxes as well

C-Corporation In smaller corporations, the founders generally are the major shareholders. shareholders the owners of a corporation

ability to raise investment money C-Corporation Advantages status limited liability ability to raise investment money perpetual existence employee benefits tax advantages 21

Disadvantages C-Corporation expensive to set up income more heavily taxed subject to double taxation on income pays taxes on profits stockholders taxed on dividends 22

Nonprofit Corporation A nonprofit corporation must fall within one of four categories: religion charity public benefit mutual benefit nonprofit corporation a legal entity that makes money for reasons other than the owner’s profit; it can make a profit, but the profit must remain within the company