Business Organizations

What do the abbreviations mean? How many people do you think own this business and what do the abbreviations after the names mean? Schnurbusch & Assoc., LLC Brandvein & Co. PC Cummings Oberkfell & Ristau Adjusters, Inc. Superior Heating and Cooling Rhymes Corporation Beckmann Brothers Chiodini Associates Dawdy & Associates, Inc. Kodner Watkins Muchnick & Dunne LLC Bridal Inspirations, Ltd. Earl Scheib Paint & Body Miller Plumbing Mesa Cycles McDonald’s Corporation Baco Itaú, S.A. Odebrecht of America, Inc. TimAir Limited B. P. p.l.c. Repsol YPF Ballast Nedam Corporate Goldman Sachs Group Galmiche and Sons Heating and Cooling Toyota Motor Corporation Boeing Corporation AOL Time Warner

Sole Proprietorship operated by an individual or a married couple minimal government regulations. Represents 70% of all businesses

Advantage and Disadvantages of Sole Proprietorship Advantages: –get to keep the profit from the business –operate as you want –easy to open Disadvantages –limited access to financial capital (hard to raise money) –unlimited liability (all responsibility on owner) –little free time –Liability: legal and financial responsibility for business if something goes wrong

Partnership operated by two or more people Two types: –General partners - share all day to day duties and responsibilities. –Limited partners – limits the responsibility the partners share for the business Each partner is only responsible for their part and actions

Advantages and Disadvantages of Partnerships Advantages: –partners can specialize (focus on fewer tasks) –Easier to raise capital (money for the business) –possibility of more time off Disadvantages: –unlimited liability (unless limited partnership) –must share profits –hard to transfer ownership –Share the Decision making/ management decisions

Corporation Separate from the stockholders (people who invest in the company) who own it. –Government treats it as if it were a person Stockholders are the legal owners of a corporation –Do not necessarily work for the corporation (most do not)

Advantages and Disadvantages of a Corporation Advantages: –limited liability for owners –specialization –easier to raise capital and to transfer ownership –Can continue to operate long after the original owners are dead Disadvantages: –more regulations, difficult to start and close –corporate tax rates are often higher –double taxation (corporations pay taxes on profits, and owners also pay taxes on any dividends – their share of the profits) –Owners do not make daily decisions, risk relying on others to do so