What we are studying next… Send your guess in!. Mr. Hudnall.

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Presentation transcript:

What we are studying next… Send your guess in!

Mr. Hudnall

Business Organizations 3 main types Sole Proprietorship Partnership Corporation Considerations for choosing the best type Owner’s liability for firm’s debts The ease and cost of forming the business The ability to raise funds The taxes The degree of operating control the operator can retain The ability to attract employees

Sole Proprietorship Advantages Disadvantages Easy & inexpensive to form Profits go to owner Direct control Fewer regulations No special taxes Ease of dissolution Unlimited liability Difficult to get capital Limited management experience Trouble getting employees Time commitment Unstable business life Losses owner’s responsibility Created, Owned, Operated, and usually financed by one person.

Famous Sole Proprietorships?

Partnerships Types of partnerships General Partnerships Partners share responsibilities, profits, etc Unlimited liability Limited Partnerships General partners have unlimited liability and are responsible for its operations. Limited partners have limited liability and do not participate in the company’s operations.

Partnerships Advantages Disadvantages Ease of formation Availability of capital Diversity of skills & expertise Flexibility to respond to changing business conditions, Relative freedom from government control No special taxes Unlimited liability for general partners Potential for conflict between partners Limited life Sharing of profits Difficulty in leaving a partnership

Famous Partnerships?

Corporations Legal entities with a separate existence from its owners. Types of Corporations C – corporations conventional S – corporations Taxed like a partnership

Corporations Advantages Disadvantages Limited liability Easy to get financing Easy to transfer ownership Unlimited life-span Tax deductions Double taxation of profits Costly & complex to form Government restrictions

What are some famous corporations? ?

LLC Advantages Disadvantages Protection of personal assets Avoid double-taxation of profits Flexible management & organization Good for foreign investors Often required to have a limited life (< 30 years) Not corporations, so can not issue stock

Largest LLCs? $98 billion in 2007 $88.3 billion $74.8 billion – self supporting federal agency $49 billion $25 billion $13.6 billion

Cooperatives Formed by people with similar interests Goals: to reduce costs and gain economic power Profits go to member-owners in proportion to contributions Have corporate features (limited liability, unlimited life, Board of Dir.) Types of Cooperatives Seller Cooperatives Buyer Cooperatives

Franchises Individually owned companies that operate like they are part of chain of companies Franchisor supplies management training, operating assistance, brand name, product, financial assistance, etc Franchisee pays a fee for the franchise and sells the goods or services of the franchisor Allows an individual to own a business without starting from nothing – buys a proven product and operating methods

Franchises Advantages Disadvantages Increased opportunity to expand (franchisor) Recognized name, product, and operating concept (franchisee) Management training and assistance (franchisee) Financial assistance (franchisee) Loss of control (franchisor) Costs of franchising Restricted operating freedom (franchisee)

Most Popular Franchises?