Business Organizations Chapter 8. Sole Proprietorships  Business organization is an establishment formed to carry on a commercial enterprise  Sole Proprietorships.

Slides:



Advertisements
Similar presentations
Business Organizations
Advertisements

The Role of Sole Proprietorships
1. 1.To examine the steps to the process of becoming a business owner. 2.To differentiate the various types of business ownership. 3.To illustrate the.
Business Organizations
Business Organizations
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Business Organization and Finance. What is a Sole Proprietorship ? A form of business organization where one person owns and operates the business.
Business Organizations
Chapter 8.  Establishment formed to carry on a commercial enterprise  Sometimes called a company or a firm  Most of the time firms are formed to produce.
Mr. Duggan/ Economics BUSINESS AND LABOR. SOLE PROPRIETORSHIPS Is a business owned and managed by a single individual.
Section 3  A Corporation is a legal entity owned by individual stockholders. › Stock is a certificate of ownership in a corporation.
Business Organization
Ch 8 Business Organizations. Warm-up 1982: Internet is first used 1989: Apple launched 1994: Yahoo.com 1996: Dell.com 2004: Facebook 2005: Youtube 2006:
Chapter 8 Business Organizations. FORMS OF BUSINESS ORGANIZATIONS: 1. Sole Proprietorship 2. Partnership 3. Corporation.
Drill 4/21  1. What is a limited liability partnership?  2. What type of jobs usually engage in limited liability partnerships?
Corporations, Mergers, and Multinationals 8.3 notes
Chapter 8SectionMain Menu Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship?
Chapter 8 Business Organizations. What is a Business Organization? A business organization is an establishment formed to carry on commercial enterprise.
Mrs. Post – CHS Adapted from Prentice Hall Presentation Software.
SECTION1 Chap. 8 Business Organizations  business organization: an establishment formed to carry on commercial enterprise.  3 basic ways to set up a.
Economics Chapter 8 Business Organizations.
Chapter 8-Business Organizations Elements of Business Operation include: A. expenses-include inventory and other items you will need to do your job. B.
Presentation Pro © 2001 by Prentice Hall, Inc. Economics: Principles in Action C H A P T E R 8 Business Organizations.
Chapter 8SectionMain Menu Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship?
Chapter 8 Business Organizations. Advantages of Sole Proprietorships.
 Types of Businesses Organizations Unit 7 Decision, Decisions.
A business organization is an establishment formed to carry on commercial enterprise.
CHAPTER 8 – TYPES OF BUSINESS ORGANIZATIONS. SECTION 1 – SOLE PROPRIETORSHIPS  Characteristics of Sole Proprietorships (single person owned business)
Chapter 8SectionMain Menu Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship?
1 10 pt 15 pt 20 pt 25 pt 5 pt 10 pt 15 pt 20 pt 25 pt 5 pt 10 pt 15 pt 20 pt 25 pt 5 pt 10 pt 15 pt 20 pt 25 pt 5 pt 10 pt 15 pt 20 pt 25 pt 5 pt You’ve.
CORPORATIONS MERGERS MULTINATIONALS. CORPORATIONS MOST COMPLEX BUSINESS ORGANIZATION LEGAL ENTITY OWNED BY STOCKHOLDERS STOCK – CERTIFICATE OF OWNERSHIP.
Activator – Chapter 8 Write down three occupations that you’re considering for your future. Categorize each of your choices based on who your employer.
Civics & Economics Mr. Vivian. Sole Proprietorship A business owned and managed by a single individual According to the IRS 75% of all businesses in the.
Chapter 8SectionMain Menu Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship?
Chapter 8 Business Organizations A business organization is an establishment formed to carry on commercial enterprise.
BUSINESS ORGANIZATIONS Chapter Eight. SOLE PROPRIETORSHIPS Section One.
Chapter 8SectionMain Menu sole proprietorship A sole proprietorship is a business owned and managed by a single individual. The Role of Sole Proprietorships.
Business organizations
Business organizations
Business Organizations
The Role of Sole Proprietorships
Business Organizations
Chapter 8 Section 3.
Business organizations
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Business Organizations
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Business Organizations
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Corporations, Mergers, and Multinationals
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Economics: Principles in Action
Business Organizations
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
Sole Proprietorships What role do sole proprietorships play in our economy? What are the advantages of a sole proprietorship? What are the disadvantages.
The Role of Sole Proprietorships
Presentation transcript:

Business Organizations Chapter 8

Sole Proprietorships  Business organization is an establishment formed to carry on a commercial enterprise  Sole Proprietorships  Are the most common type of business organization  Managed by a single individual  That person earns all profits, is responsible for all of the firms debts

Sole Proprietorships  Advantages A.Easy to start up- small amount of paperwork and legal expense  1. obtain a business license  2. Obtain a site permit for physical business  3. Register business name B.Relatively few regulations  Least regulated form of business  Subject to health codes, zoning laws C.Sole receiver of profit  Owner keeps all profits after taxes D.Full Control  Owner can run business as they wish  Can respond quickly to changes in the marketplace E.Easy to discontinue  After all debts and obligations paid there are no other legal obligations to business

Sole Proprietorships  Disadvantages A.Biggest disadvantage is liability (legally bound obligation to pay debts)  Sole proprietors are personally responsible for all business debts (unlimited liability) B.Limited access to resources  Difficult to expand business  Hard to acquire funding and loans from banks  Hard to find employees- can’t offer security, advancement or fringe benefits of larger business organizations C.Lack of permanence  Has a limited life  Death, retirement, loss of interest by owner business ceases to exist

Partnerships  A business owned by two or more persons who agree on a specific division of responsibility  Three different types of partnerships I.General Partnership  All partners share equally in responsibility and liability II.Limited Partnership  Only one partner has unlimited personal liability for the firms actions  Other partners do not actively run business  Limited partners can only lose initial investment III.Limited Liability Partnerships  New type of business organization  All partners protected from liability in certain situations

Partnerships  Advantages A.Ease of start-up  Written partnership agreements called articles of partnership spell out each partners rights and responsibilities  Uniform Partnership Act  uniform state law adopted by most states that establish rules for partnerships 1.Requires common ownership interest 2.Profit and loss sharing 3.Shared management responsibilities B.Partnerships are subject to few government regulations C.Shared decision making  Each partner bring different strengths and skills to the business D.Larger pool of capital  More assets improve the ability to expand business and borrow funds  Easier to attract employees E.Taxation  Partners pay taxes only on their profits

Partnerships  Disadvantages A.Unlimited liability, except in LLP or LP  In LP general partner has unlimited liability B.Lack of absolute control C.Potential for conflict between partners

Corporations, Mergers and Multinationals  Most complex form of business organization  Corporation is a legal entity  Owned by individual stockholder, each stockholder has limited liability for firm’s debts  Stock is a share of ownership in a corporation  Corporation is considered a legal entity  It pays taxes  Engages in business  Makes contracts  Can sue other parties, and get sued  Two types of corporations  Closely held corporations  stock held by a few people  Stock rarely traded  Publicly held corporations  Many shareholders  Stocks bought and sold on the open market (stock exchanges)  All corporations have the same basic structure A.Stockholders elects a board of directors to make major decisions for the for corporation B.Board hires professional managers to run day to day business

Corporations, Mergers and Multinationals  Advantages of Incorporation  Limited liability to owners  Individual investors do not responsible for corps. actions, lose only money they have invested in business  Transferrable ownership  Stockholders can sell stocks to others  Ability to attract capital  Easier to grow company  Can sell stocks to raise capital  Can sell bonds (a formal contract to repay borrowed money at a fixed rate at intervals)  Long life  Company outlasts original owners, can do business indefinitely

Corporations, Mergers and Multinationals Disadvantages of Corporations  Difficult and expensive to set up  Must file for state corporate charter (certificate of incorporation)  Double Taxation  Corporations are legal entities and need to pay taxes on their income  Stockholders also pay taxes on their dividends (portion of corporate profits paid to stockholders)  When stockholders sell their stock pay a tax called capital gains tax if they make a profit  Loss of control  Professional managers don’t always act in the best interest of the company  More regulation  Must hold annual meetings for shareholders  Publically traded companies required to make annual reports to the Securities Exchange Commission

Corporations, Mergers and Multinationals Corporate Combinations  Companies combine with other companies to create larger more efficient firms  Can sell goods at a lower price Three types of mergers  Horizontal Merger  Two or more companies that compete in the same market and provide the same good or service  Try to improve efficiency, reduce costs and boost revenue  Monitored closely by the federal government so they do not create a monopoly  Vertical Merger  Companies involved in different stages of producing good or service  New firm can control all phases of production  Typically do not lessen competition  Conglomerate  Buy companies that produce unrelated goods  Have more that three businesses that produce unrelated products  One business earns a majority of the firms profits

Corporations, Mergers and Multinationals Multinational Corporations  Produce goods throughout the world  Operate in more than one country at a time  Must obey laws and pay taxes in all countries where they operate  Many have operating budgets bigger than most governments  Advantages  Provide jobs  Spread technology  Help poorer nations improve their standard of living  Disadvantages  Have too much influence over culture and politics in countries where they operate  Working conditions are poor

Other Organizations Business franchise  Semi independent business that pays fees to parent company  In return it has the exclusive right to sell a certain product in a given area  Franchiser (parent company) develops products and works with local franchise to produce and sell product  Allows owners a degree of control and owners benefit from support of parent company

Other Organizations Advantages A.Come with a built in reputation B.Management and training support C.Standardized quality  owners follow certain rules and processes to guarantee product quality D.National advertising E.Financial assistance F.Centralized buying power  buy materials in bulk to keep costs down Disadvantages A.High franchising fees and royalties  Royalties are a share of earnings B.Strict operating standards  Must follow all rules in the franchise agreement C.Purchasing restrictions D.Limited product line  can only sell approved products

Other Organizations Cooperatives  Business owned and operated by a group of individuals for their shared belief  Three categories  Consumer Cooperatives (purchasing cooperatives)  Sell merchandise to their members at reduced prices  Make large purchases in bulk to obtain goods at a lower cost  Service Cooperatives  Provide a service at a discounted price  Producer cooperatives  Help members sell their products (usually agricultural products)

Other Organizations  Nonprofit Organizations  Business that does not operate for a profit  Usually tries to benefit society  Exempt from income taxes  Some operate with partial government support  Almost all provide services rather than goods  Professional Organizations  Improve image, working conditions, set codes of conduct and skill of people in particular occupations  Labor Unions  Organized group of workers  Attempt to improve working conditions, wages and fringe benefits