1. BUSINESS STRUCTURES GOALS Understand how ownership differs among sole proprietorships, partnerships, and corporations. Grasp the advantages and disadvantages of the three major types of business ownership. Learn the five functions of managers. Recognize three specialized forms of business organizations. Unit 3, Part 2

2. TYPES OF BUSINESS OWNERSHIP  Sole proprietorship – owned by one person who receives all profit and bears all losses.  Partnership – small group of people (2 or 3)  Corporation – owned by a # of people (called shareholders) under permission of the state, has all rights and responsibilities Which type of business do you think represents the largest number of businesses in the United States?

3. UNITED STATES BUSINESS OWNERSHIP 16 0 14 12 10 8 6 4 2 Millions of Businesses 17.9 Million Sole Proprietorships 5.5 Million Corporations 2.2 Million Partnerships

4. MANAGING A SUCCESSFUL BUSINESS  Planning – thinking, planning, analyzing info used to make business decisions  Organizing- determining what needs to be done and who will do it.  Staffing – finding, selecting, hiring, training and rewarding employees.  Leading – inspiring others to work willingly  Controlling- comparing what happened to what was planned to happen.

5. EXPANDING A BUSINESS  Many businesses begin as sole proprietorship  A partnership is formed - drawing up a written agreement called Articles of Partnership  A corporation is created – filing for Articles of Incorporation with the state agency in the state of operation

6. Sole Proprietorship  Advantages  Ease of starting and going out of business  Control over profits and business operations  Pride of ownership  Lower taxes (no corporate income taxes)  Disadvantages  Unlimited liability  Difficulty in raising financial capital  Responsible for all losses  Management knowledge may be limited

7. Partnership  Advantages  Easier to raise financial capital  Partners may combine managerial skills  Personal satisfaction  Lower taxes (no corporate taxes)  Disadvantages  Unlimited liability  Shared profits  Possible partner conflicts  Possible instability after death of a partner

8. Corporation  Advantages  Limited liability  Greater financial capital  Unlimited life  Specialized management  Disadvantages  Increased taxation (corporate income tax(  Difficulty in starting (each state has own rules)  May be larger, more bureaucratic than other forms  Increased government control

9. SPECIALIZED FORMS OF BUSINESS ORGANIZATIONS  Franchises – written cooperatives granting permission to sell someone else’s product or service in a prescribed manner  Cooperatives – owned by members and managed in their interest  Non-profit corporations  Serves citizens  Has not stockholders