1. Civics & Economics Mr. Vivian

2. Sole Proprietorship A business owned and managed by a single individual According to the IRS 75% of all businesses in the US are sole-proprietorships but these generate only about 6% of US sales

3. Sole Proprietorship Advantages Easy start-up (business licenses, site permit, name of business) Sole receiver of profit Full control of business Easy to discontinue Not subject to special business taxes

4. Sole Proprietorship Disadvantages Unlimited personal liability Liability is a legally bound obligation to pay debts Sole proprietors are bound to all of their business debts Limited access to resources Limited life – business lack permanence beyond the life of the sole proprietor

5. Partnerships A business organization owned by two or more persons who agree on a specific division of responsibilities and profits

6. Partnerships Advantages Easy start-up Shared decision making Specialization – each partner can bring his or her talents Larger pool of assets – helpful when the business needs to borrow money Not subject to special business taxes

7. Partnerships Disadvantages Unlimited liability Each general partner is bound to debt incurred and responsible for paying this debt General partners do not have absolute control over their business Potential for conflict among partners

8. Corporations A legal entity owned by individual stockholders Stockholders own shares of stock Stock = certificated ownership in a corporation Stockholders are part owners of the corporation

9. Corporations Advantages Limited liability for owners Transferable ownership – owners can sell stock and get money in return Long Life – business does not end with the death of the owners More potential for growth

10. Corporations Disadvantages Expensive and difficult to start up Double taxes Corporations pay taxes on income Stockholders receive dividends (profits paid out to stockholders) Dividends are also taxed Potential loss of control by the founders – Board of Directors usually run corporations More legal requirements and regulations

11. Corporate Combinations Horizontal Merger – joining of two or more firms competing in the same market with the same good or service Vertical Merger – joining of two or more firms involved in different stages of producing the same good or service. Conglomerate – merging of more than three businesses that make unrelated products