Business Ownerships MARKETING DYNAMICS UNIT 1 LESSON 2 Copyright © Texas Education Agency, All rights reserved.

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Goals  THE STUDENT WILL LIST THE TYPES OF BUSINESS OWNERSHIPS.  THE STUDENT WILL DISCUSS ADVANTAGES AND DISADVANTAGES OF EACH TYPE.  THE STUDENT WILL EXPLAIN AN ECONOMIC RESOURCE Copyright © Texas Education Agency, All rights reserved.

Terms Sole Proprietorship Partnership General Partnership Limited Partnership Corporation Stock Franchise Franchisee Franchisor Non-profit Corporation Unlimited liability Limited liability Economic Resources 4 Copyright © Texas Education Agency, All rights reserved.

Business Ownership There are multiple types of business ownerships with advantages and disadvantages for each. As a business person it is essential that you determine which form of business ownership is best for your business. Forms of business ownership can change also as the company grows. 5 Copyright © Texas Education Agency, All rights reserved.

Business Ownership Sole Proprietorship is a business owned and operated by one person. –Most common form of ownership in the U.S. 6 Copyright © Texas Education Agency, All rights reserved.

Sole Proprietorship Advantages –Easy to start up –Keep all profits –Make all decisions yourself –Less government regulations Disadvantages –You have to come up with money to start and run business. –Unlimited liability (Creditors can take your personal assets) –You have to manage all aspects of the business. –Business ends when owner dies.. 7 Copyright © Texas Education Agency, All rights reserved.

Business Ownership Partnership is a legal agreement between two or more people to be jointly responsible for the success or failure of a business. –Least common form of business ownership –Law offices, doctors offices and real estate offices are common partnerships. 8 Copyright © Texas Education Agency, All rights reserved.

Partnerships Advantages Easy to setup More than one source of money. Combines skills of all owners. Less regulations than corporations. Disadvantages Owners may not always agree Actions of one partner are legally binding on all. All partners share debt. Business dissolved is one partner dies. Unlimited liability between all of the partners. 9 Copyright © Texas Education Agency, All rights reserved.

Partnerships There are two types of partnership –General partnership is when each partner shares in the profits and losses. Each partner has unlimited liability. –Limited partnership is when each limited partner is liable for debts only up to the amount of his or her investment. There must at least one general partner who has unlimited liability. Must make public notice that one or more partners have limited liability., 10 Copyright © Texas Education Agency, All rights reserved.

Business Ownership A Corporation is a business that is chartered by a state and legally operates apart from the owners as a separate legal entity. 11 Copyright © Texas Education Agency, All rights reserved.

Business Ownership Corporations –Corporations form “boards” who hire directors and officers to manage the affairs of the corporation. –The corporations value is divided into equal units called shares. Shares are sold to individual investors through the stock market. –Stockholders actually are the ones who own the corporation. 12 Copyright © Texas Education Agency, All rights reserved.

Corporations Advantages Limited liability of company officers and stockholders. Specialized skills set of managers Additional sources of money People can easily enter or leave the business. Disadvantages More government regulation Pay taxes at the corporate tax rates. More difficult to startup. Intricate accounting and record keeping. 13 Copyright © Texas Education Agency, All rights reserved.

Business Ownership A franchise is a legal agreement to open a business in the name of a recognized company. –Franchisee is the person who is purchasing the franchise. –Franchisor is the person who is owns the recognized company,. 14 Copyright © Texas Education Agency, All rights reserved.

Franchise Advantages Business already well known Training on how to run business Assistance with advertising and merchandising Day to day guidance on how to be successful Disadvantages Must follow franchisor guidelines Large amounts of capital to purchase most franchises Percentage of profits go back to franchisor. 15 Copyright © Texas Education Agency, All rights reserved.

Business Ownership Economic resources are the things used in producing goods and services. –Factors of production Land Labor Capital Entrepreneurship 16 Copyright © Texas Education Agency, All rights reserved.

Business Ownership How a business chooses to use their economic resources determines how successful they will be. Entrepreneurs are those individuals who have the skills necessary to start businesses and run them successfully. Entrepreneurs risk their time and money to start a business. 17 Copyright © Texas Education Agency, All rights reserved.

Picture Resources - man with pen woman doctor laptop and cell phone offices vertical windows hands 18 Copyright © Texas Education Agency, All rights reserved.