Chapter 8: Business Organizations Section 1: Sole Proprietorships

 Business Organization  Who owns the business?  How do the owners work together?  How is the business run? Who makes the final decisions? Who pays the bills? Who gets the profits?  Business organization is the structure which runs a company.

 Who owns the business?  A SINGLE (sole) individual  Who runs the business?  A SINGLE (sole) individual  Who controls all of the business profits?  A SINGLE (sole) individual  Who is responsible for all of the debts?  A SINGLE (sole) individual

 Most of American businesses are sole proprietorships.  However, they only generate 4% of all US sales. What can you guess about sole proprietorships based on the statements above?

 Entrepreneurial Spirit  Work for someone else?  Work for MYSELF!  Required Characteristics Ambitious Risk-taker Organized Responsible Energetic Goal-oriented Business-smart

 Benefits!  Easy to start-up Small legal expense Little paperwork Business license  From local government  Perhaps state certifications Occupancy certificate Name registration

 Benefits!  Few regulations (compared to other business organizations)  Receive all of the PROFITS!!!!  Total control

 Disadvantages  Unlimited PERSONAL liability You are responsible (liable) for all costs – including lawsuits! Liability includes your PERSONAL property

 Disadvantages  Limited access to resources MONEY to start-up or expand comes from YOU Limited skills Limited time  Lack of permanence If the owner dies or retires Workers leave because of limited fringe benefits

 Summary:

Your Turn: 1. Create a “T-Chart” which lists at least  THREE advantages and  THREE disadvantages of sole proprietorships. 2. Place a STAR next to the MOST important one (your opinion) in each column. AdvantagesDisadvantages 1 ~~ 2 ~~ 3 ~~ 1 ~~ 2 ~~ 3 ~~ Sole Proprietorships