Objective 1.03 Evaluate the role of different types of business and the various forms of business ownership in the United States.

Types of Business Ownership Sole Proprietorship Partnership Corporation Franchises Cooperatives Non-Profit Corporation

Sole Proprietorship Business owned by one person More than two-thirds of U.S. Businesses are operated as Sole Proprietorships Sole Proprietor has complete responsibility for all business decisions

Partnership Business owned and managed by a small group Usually not more than two or three people Written agreement allows these partners to share profits, losses, and have unlimited liability.

Corporation Business owned by a number of people and operated under written permission from the state in which it is located. Certificate of Incorporation – written permission Acts as a single individual on behalf of owners

continued People become owners by buying shares of stock. –Known as shareholders The corporation is a legal entity w/ an existence and life separate from its owners.

Managing Managers are the employees who are responsible for coordinating resources within a business Activities are focused on five key areas: –Planning –Organizing –Staffing –Leading –Controlling

Planning Thinking, gathering, and analyzing information then making decisions about all phases of the business Goals set and strategies devised Make sure you have enough time for this stage

Organizing Process of determining what work has to be done and who is to do it. Organization chart – work relationships Jobs assigned and authority given to certain people

Staffing All activities involved in: –Finding –Selecting –Hiring –Training –Appraising –Rewarding

Leading Work of people must be directed so that tasks will be performed correctly Effective leaders inspire workers to willingly perform their jobs and accept responsibility Requires good human relations and communication skills

Controlling Comparing what actually happens with what was planned Using the standards set up in the planning stage Ex. Standard of Production set at 12 customer inquiry calls per hour, the controlling activity would be count the actual calls handled per hr. per employee

How to form a Partnership Written agreement – Articles of Partnership Includes these six things: –Name –How much each invests –Salary of each partner –Proportion of each partners investments –Partners responsibilities –What happens in case of Death, or withdrawal

Creating a Corporation Draw up a plan for Corporation –How much shares of stock will be worth based on total investment of company File an application requesting permission to operate as a corporation to the state State issues a certificate of incorporation

continued Main stockholders (people who own most shares of stock) are considered controlling shareholders Board of Directors – group responsible to guide the operations of the corporation They are in highest authority positions and will make policy decisions.

Dividend Profits that each shareholder receives Ex. 24,000 Shares in Corporation –After taxes paid corporation made a profit of $31,600 –Board decides to keep $10,000 for expansion –$21,600 divided amongst 32 shareholders –$21,600 / 24,000 =.90 a share Own 12,000 shares X.90 = 10,800

Specialized forms of Business Ownership Franchises Cooperative Non-Profit or Municipal Corporation

Franchise Written contract granting permission to sell someone else’s product or service in a prescribed manner. Franchisee - owner who received franchise from parent company Franchisor – Parent company

Cooperative Owned by the members it serves and is managed in their interest Two main types: –Consumers’ cooperative –Producers’ cooperative Started a lot like a corporation only difference is the controlling factor

Non-Profit Organization Municipal Corporation – An incorporated town Functions by paying for supplies and services under the corporate name of the city Services are provided for its citizens with money from taxes levied

continued Non-Profit Organizations operate in the same basic way. –They provide a service, but not for a profit. Ex. Private Colleges and Universities, American Red Cross, Boy Scouts of America, and Distributive Education Clubs of America.