1. Understand the nature of business. 1 Essential Standard 2.00

2. Understand the types of business ownership. 2 Objective 2.01 All pictures from www.google.comwww.google.com

3. Types of Business Ownership 3 Sole Proprietorship Partnership Corporation Specialized partnership Specialized corporations Cooperative Franchise All pictures from www.google.comwww.google.com

4. Sole Proprietorship 4 How many people are considered for ownership? Business owned by one person. Who may manage a sole proprietorship? Manager may manage business. Formation may vary by states The Buck Stops with Chuck All Pictures from www.google.com www.google.com

5. Sole Proprietorship Advantages 5 For owner Easy to form Complete control of business Recipient of 100% of the profit One time taxation All Pictures from www.google.comwww.google.com

6. Sole Proprietorship Disadvantages 6 Limited capital What are liabilities? Liability is for which anything a company owes. Unlimited liability Types of liabilities Employment oExample: Firing of an employing that missed significant days from work Accidents and injuries on premises oExample: Customer breaks a leg while on business property Company vehicle-related oExample: Driver runs into a building while driving company’s car Product-related oExample: Toys easily injure toddlers Errors and omissions oExample: Employee accidentally damages a customer’s property Limited to the lifetime of owner www.google.com

7. Sole Proprietorship continued 7 Termination How is a sole proprietorship terminated? Decision or life of owner What are some sources that may be used for investment? Personal, gifts, borrowed, and others may vary What are some local examples? www.google.com

8. Partnership 8 How many people are considered for a partnership ownership? Association of two or more people to carry on as co-owners of a business for profit. By agreement - Partnership formed after they agree to conditions in a contract. By proof of existence - Formed by the way two or more people conduct their business Who may manage a partnership? Determined by partnership agreement Formation varies by each state All Pictures from www.google.com

9. 9 1. Dormant partner plays no role and is not known to the public. 2. General partner plays an active role and has unlimited liability (every partnership must have at least one general partner). 3. Limited participate as investors and have limited liability. 4. Secret partner plays an active role but is secret from society. 5. Silent partner does not have an active role but is known to the public. Specialized Partners

10. Partnership Advantages 10 More capital and credit available Work load more evenly shared Losses are also shared Partnership Disadvantages Profits are shared Decisions are made jointly

11. Partnership Disadvantages continued 11 Unlimited liability depending on type of partnership Types of liabilities Unlimited - Type of liability in which you can lose all your assets. Employment oExample: Firing of an employing that missed significant days from work Accidents and injuries on premises oExample: Customer breaks a leg while on business property Company vehicle-related oExample: Driver runs into a building while driving company’s car Product-related oExample: Toys easily injure toddlers Errors and omissions oExample: Employee accidentally damages a customer’s property

12. Partnership continued 12 Partnerships are formed by an agreement to the conditions of partnership of agreement Partnerships are terminated by actions of the partners, bankruptcy, death and/or court order What are some sources possible for investment? Personals of partner(s), gifts, borrowed, and others may vary What are some examples? South Railroad Limited Partnership Eden Limited Partnership

13. Types of Partners Type of Partner Participation in the Business Relationship to the Public Degree of Liability DormantNot activeUnknownUnlimited GeneralActiveKnownUnlimited LimitedNot activeKnownLimited SecretActiveUnknownUnlimited SilentNot activeKnownUnlimited 13

14. Corporation 14 An entity with the legal authority to act as a single person Who may manage a corporation? Managers, board of directors, and shareholders Shareholders of common stock get to vote. Each stock equals one Vote at the shareholder meeting. How are corporations formed? Filing of an article of incorporation with state government Articles - of incorporation. All pictures from www.google.comwww.google.com

15. Corporation continued 15 Ownership Determined by purchase of stock A stockholder, or shareholder, owns a ‘piece’ of the company One share of common stock equals one vote www.google.com

16. Corporation continued 16 Advantages Capital easy to obtain Limited liability for shareholders Possibility of unlimited lifetime of business All pictures from www.google.comwww.google.com

17. Corporation continued 17 Disadvantages Double taxation: profits and earnings Government regulations Operations controlled by shareholders and board of directors instead of original owner(s) Example: 10 years after founding Apple, Steve Jobs was fired by the board of directors. Who later returned and brought the company back to profitability. All pictures from www.google.comwww.google.com

18. Corporation continued 18 Disadvantages Types of liabilities Employment Example: Firing of an employing that missed significant days from work Accidents and injuries on premises Example: Customer breaks a leg while on business property Company vehicle-related Example: Driver runs into a building while driving company’s car Product-related Example: Toys easily injure toddlers Errors and omissions Example: Employee accidentally damages a customer’s property Directors and officers Example: One ingredient intentionally omitted from packages

19. Corporation continued 19 How is the life of a corporation terminated? Determined by charter or unlimited lifetime What is the source of investment for corporations? Purchase of stocks All pictures from www.google.comwww.google.com

20. Specialized Corporations 20 S-Corporation, also known as Subchapter “S”, treats partners as individuals by taxing them once. Limited liability company (LLC) Why do small businesses operate as LLCs? Used by small businesses to receive limited liability protection. Nonprofit Corporation Who benefits from services of nonprofit corporation? Benefits the public and is exempt from taxation

21. Types of Corporations 21 Domestic - chartered in a specific state Examples located in North Carolina: Bank of America Corporation Lowe’s Home Improvement Store Foreign - chartered in one state, but doing business in another state Alien - chartered in another nation, but doing business in a state

22. Types of Corporations continued 22 Public-established for a governmental purposes Examples National Science Foundation Export-Import Bank of the United States Private-established by individuals for business or charitable purposes. Examples Enterprise Rent-A-Car American Cancer Society

23. Cooperatives 23 Cooperatives Formed by a group of individuals or businesses to serve their needs in order to gain bargaining power against bigger businesses What are some examples?

24. Franchises 24 What is a franchise? Franchise grants permission to sell products and services to another business. What are some examples of business-format franchise? Jackson-Hewitt Tax Services Burger King Firestone Tires Two main formats: Business-format Requires franchisee to sell products or service in a specific format What are some examples of business-format franchise? Product trade-name Allows franchisee to sell specific products. This format is usually formed by automobile, appliance, and petroleum product What are some examples of Product Trade - franchises? Marc Jacobson Toyota Bobby’s Appliance store Local stores selling shell gas

25. Work Cited 25 North Carolina Department of Public Instruction www.google.com