TYPES OF BUSINESS OWNERSHIPS

 It is a business owned and operated by one person  The owner is responsible for all operations of the business and assumes all the risk (unlimited liability)  Borrowing money from the banks may be difficult because they usually require collateral when lending money SOLE PROPRIETORSHIP

Advantages  Owner makes all decisions and is his or her own boss  Owner keeps all the profits  All financial information can be kept secret  This type of business is easy to start or close Disadvantages  Owner is responsible for all debts  Costs and time commitment can be high  Funding can be difficult to obtain  Owner is responsible for all aspects of the business  Owner doesn’t have fringe benefits SOLE PROPRIETORSHIPS

 A form of business organization in which two or more people own and operate it  The partners have a partnership agreement drafted by a lawyer  Name and location of business  Purpose of business  Each partner’s investment  Structure for dividing profits/losses  Duties for each partner  Procedure for ending partnership PARTNERSHIP

Advantages  Partners co-own the business  They share responsibilities  They may have greater financial resources than a sole proprietor  They share business losses  They share time commitment Disadvantages  Partners have unlimited personal liability for all the other partners  May have conflicts  Profits are shared  Partnerships are more difficult to close down than sole proprietorships PARTNERSHIP

 Legal entity that exists independently of its owners (shareholders)  Same right and obligations as a natural person  Shareholders: people who buy shares in a company, they become part owners of it  Shareholders elect a Board of Directors who direct the overall direction of the corporation – they hire Officers (presidents, CEOs, etc.) to decide on objectives for the company – they hire Managers who supervise the employees  Corporations can be either private, public, crown or non-profit CORPORATION

Advantages  Limited liability  Shareholders do not operate the company  Raise funds easier than sole proprietorships and partnerships  Have a lower tax rate than the other two  Exist after the death of the owner Disadvantages  More complicated structures than the other two  Value of company shares can change depending on changes in the stock market CORPORATION

 Owned and operated by a group of people with a strong common interest  Stat-up costs are shared among the members of the co-op  Members own and control the business and make all business decisions  Profits are divided up by the amount of business the person does with the co-op CO-OPERATIVES

Advantages  Limited risk  Everyone gets 1 vote  Buy in bulk (savings) Disadvantages  Each member has the same amount of control over the co-op not depending on investment  Commitment varies with the amount of money a member has invested  Decision making becomes harder as the number of members increase CO-OPERATIVES

 Already established good for being known  Rights to use the business name and sell product FRANCHISE

Advantages  Locations and famous companies cost more  Given support  Get a cut of the action  Agreement in a contract  Provides packaging, etc., and ads Disadvantages  Hire by himself  Not as much freedom  Costs a lot  Lack of control FRANCHISE