CONTEMPORARY ECONOMICS© Thomson South-Western 8.3Corporations and Other Organizations  Describe how a corporation is established.  Understand why the corporate form is favored by large businesses.  Recognize other types of organizations businesspeople use to accomplish their goals. Objectives

CONTEMPORARY ECONOMICS© Thomson South-Western 8.3Corporations and Other Organizations  corporation  articles of incorporation  private corporation  publicly traded corporation  S corporation  limited liability company (LLC)  limited liability partnership (LLP)  cooperative  not-for-profit organizations Key Terms

CONTEMPORARY ECONOMICS© Thomson South-Western 8.3 Corporations and Other Organizations SLIDE 3 Incorporating A corporation is a legal entity with an existence that is distinct from the people who organize it, own it, and run it.

CONTEMPORARY ECONOMICS© Thomson South-Western 8.3 Corporations and Other Organizations SLIDE 4 Articles of Incorporation Articles of incorporation are a written application to a state seeking permission to form a corporation A charter offers the legal authorization to organize a business as a corporation

CONTEMPORARY ECONOMICS© Thomson South-Western 8.3 Corporations and Other Organizations SLIDE 5 Comparing Corporations with Sole Proprietorships and Partnerships (a) As a Share of All Businesses(b) As a Share of Business Sales Corporations 83.6% Sole proprietorships 4.6% Partnerships 11.8% Sole proprietorships 73.0% Partnerships 8.3% Corporations 18.7% Figure 8.4

CONTEMPORARY ECONOMICS© Thomson South-Western 8.3 Corporations and Other Organizations SLIDE 6 Types of Corporations Private corporation Publicly traded corporation

CONTEMPORARY ECONOMICS© Thomson South-Western 8.3 Corporations and Other Organizations SLIDE 7 Advantages of Incorporation Easier to raise financial capital Limited liability Unlimited life Specialized management

CONTEMPORARY ECONOMICS© Thomson South-Western 8.3 Corporations and Other Organizations SLIDE 8 Disadvantages of Incorporation Difficult and costly to start More regulated Owners have less control Double taxation

CONTEMPORARY ECONOMICS© Thomson South-Western 8.3 Corporations and Other Organizations SLIDE 9 Other Organizations Hybrid businesses Cooperatives Not-for-profit organizations

CONTEMPORARY ECONOMICS© Thomson South-Western 8.3 Corporations and Other Organizations SLIDE 10 Hybrid Businesses S corporation combines the limited liability protection of the corporate form with the single taxation feature of a partnership. Limited liability company (LLC) combines the limited liability feature of the corporation with the single-tax provisions of a partnership. Limited liability partnership (LLP) has the advantages of an LLC and is easier to establish.

CONTEMPORARY ECONOMICS© Thomson South-Western 8.3 Corporations and Other Organizations SLIDE 11 Cooperatives A cooperative is a group of people who pool their resources to buy and sell more efficiently than they could independently. Consumer cooperative—a retail business owned and operated by some or all of its customers in order to reduce costs Producer cooperative—producers join forces to buy supplies and equipment and to market their output

CONTEMPORARY ECONOMICS© Thomson South-Western 8.3 Corporations and Other Organizations SLIDE 12 Not-for-Profit Organizations Not-for-profit organizations engage in charitable, educational, humanitarian, cultural, professional, and other activities, often with a social purpose. Revenues typically include some combination of voluntary contributions and service charges.