2. Types of Business Ownership
Chapter 3
If you owned a small business, what type of business ownership would best suit your needs and future goals?

3. 3 Types of Business Ownership
Chapter 3
Understanding and selecting the proper form of organization for your business can be an essential factor in its success.

4. Employer Identification Number (EIN) unlimited liability limited life
Types of Business Ownership
Chapter 3
public sector
private sector
competition
price competition
nonprice competition
market
oligopoly
monopoly
profit
sole proprietorship
entrepreneur
Employer Identification Number (EIN)
unlimited liability
limited life
partnership
partnership agreement
general partner
limited partner
cooperative
corporation
articles of incorporation

5. limited liability company (LLC) franchise
Types of Business Ownership
Chapter 3
corporate bylaws
corporate charter
board of directors
limited liability company (LLC)
franchise

6. Types of Business Ownership
Chapter 3

7. Describe the effects of competition on businesses and consumers.
Types of Business Ownership
Chapter 3
Section 1
Private Enterprise and Business Ownership
Describe the effects of competition on businesses and consumers.
Explain how competition impacts the consumer.
Identify the advantages and disadvantages of a sole proprietorship.
Explain the differences between general and limited partners.
Identify the advantages and disadvantages of a partnership.
Identify the advantages and disadvantages of a cooperative.

8. Private Enterprise System
Types of Business Ownership
Chapter 3
Section 1
Private Enterprise and Business Ownership
Private Enterprise System
Public schools are part of the public sector.
Your local supermarket is part of the private sector.
public sector
government-funded services
private sector
business not funded by the government

9. Private Enterprise System
Types of Business Ownership
Chapter 3
Section 1
Private Enterprise and Business Ownership
Private Enterprise System
Two Types of Competition
Excellent service and quality construction are examples of nonprice competition.
Discounts and coupons are examples of price competition.
competition
the struggle among businesses for customers
price competition
struggle for business that assumes consumers will choose the lowest priced products available
nonprice competition
struggle for business that relies on factors other than price to attract and keep customers

10. Private Enterprise System
Types of Business Ownership
Chapter 3
Section 1
Private Enterprise and Business Ownership
Private Enterprise System
market
field of exchange that takes place between buyers and sellers
Market
oligopoly
market condition characterized by the existence of a few large businesses in a market
Levels of Competition
Monopoly
Oligopoly
monopoly
market condition characterized by the existence of only one supplier in a market

11. Private Enterprise System
Types of Business Ownership
Chapter 3
Section 1
Private Enterprise and Business Ownership
Private Enterprise System
Competition
Economic Changes
Government Regulations
Risks of Doing Business
New Technologies
Natural Disasters
Lawsuits

12. Private Enterprise System
Types of Business Ownership
Chapter 3
Section 1
Private Enterprise and Business Ownership
Private Enterprise System
Who benefits when a business makes a profit?
Employees
The government (taxes)
The economy
Other businesses
Society
profit
the money left after paying the expenses of doing business

13. Business Ownership Organization
Types of Business Ownership
Chapter 3
Section 1
Private Enterprise and Business Ownership
Business Ownership Organization
Three Legal Forms of Business Ownership
Sole Proprietorship
Partnership
Corporation

14. A sole proprietorship is usually started by an entrepreneur.
Types of Business Ownership
Chapter 3
Section 1
Private Enterprise and Business Ownership
Sole Proprietorship
A sole proprietorship is usually started by an entrepreneur.
sole proprietorship
business owned by one person
entrepreneur
individual who takes the risk of starting a new business

15. Advantages of Sole Proprietorship
Types of Business Ownership
Chapter 3
Section 1
Private Enterprise and Business Ownership
Sole Proprietorship
Advantages of Sole Proprietorship
Easy Setup
Licensing and Paperwork
– Employer Identification Number (EIN)
Total Control
Profits to Owner
Profits Taxed Once
Few Government Regulations
Employer Identification Number (EIN)
number assigned by the IRS used for income tax purposes

16. Disadvantages of Sole Proprietorship
Types of Business Ownership
Chapter 3
Section 1
Private Enterprise and Business Ownership
Sole Proprietorship
Disadvantages of Sole Proprietorship
Limited Capital
Unlimited Liability
Limited Human Resources
Limited Life
unlimited liability
situation in which the owner of a business is responsible to pay the business debts out of personal assets
limited life
situation in which a business’s life span or existence is determined by the owner’s life span or decision to terminate the business

17. A partnership requires a partnership agreement.
Types of Business Ownership
Chapter 3
Section 1
Private Enterprise and Business Ownership
The Partnership
A partnership requires a partnership agreement.
partnership
business owned by two or more persons
partnership agreement
written document that states how a partnership will be organized

18. General Partner Limited Partner
Types of Business Ownership
Chapter 3
Section 1
Private Enterprise and Business Ownership
The Partnership
Two Types of Partners
General Partner
Limited Partner
general partner
business partner who has decision-making authority, takes an active role in the operation of the business, and has unlimited liability
limited partner
business partner who does not take an active role in decision making or in running the business

19. Advantages of a Partnership
Types of Business Ownership
Chapter 3
Section 1
Private Enterprise and Business Ownership
The Partnership
Advantages of a Partnership
Easy Setup
More Skills and Knowledge
Available Capital
Total Control by Partners
Profits Taxed Once

20. Disadvantages of a Partnership
Types of Business Ownership
Chapter 3
Section 1
Private Enterprise and Business Ownership
The Partnership
Disadvantages of a Partnership
Unlimited Liability
Possible Disagreement Among Partners
Shared Profits
Limited life

21. The Partnership 3 Types of Business Ownership Section 1
Chapter 3
Section 1
Private Enterprise and Business Ownership
The Partnership

22. Advantages of a Cooperative
Types of Business Ownership
Chapter 3
Section 1
Private Enterprise and Business Ownership
The Cooperative
Advantages of a Cooperative
Each member has an equal vote
Each member has some control over the business
Saving money on purchases
Pooled resources
cooperative
an organization that is owned and operated by its members

23. Disadvantages of a Cooperative
Types of Business Ownership
Chapter 3
Section 1
Private Enterprise and Business Ownership
The Cooperative
Disadvantages of a Cooperative
All decisions must be approved
Limited flexibility
Slow decision-making
Limited capital
Retaining and recruiting new members

24. 3 Types of Business Ownership Section 1
Chapter 3
Section 1
Private Enterprise and Business Ownership
You are starting your own business repairing bicycles. Your uncle is supplying money for start-up costs. Decide whether your uncle should be a general partner or limited partner.
Sample response: My uncle should be a limited partner so that I can control the business and he will not lose additional money if my venture does not work.

25. Describe two types of corporations.
Types of Business Ownership
Chapter 3
Section 2
The Corporation
Describe two types of corporations.
Summarize the process of forming a corporation.
Discuss the advantages and disadvantages of a corporation.
Discuss the advantages and costs of a franchise.

26. Types of Business Ownership
Chapter 3
Section 2
The Corporation
What Is a Corporation?
About 20 percent of businesses in the United States are organized as corporations, but they produce about 90 percent of the total business revenue in the United States.
corporation
business organization that operates as legal entity that is separate from its owners and is treated by law as it if were an individual person

27. Starting a Corporation
Types of Business Ownership
Chapter 3
Section 2
The Corporation
Starting a Corporation
Articles of Incorporation
Paperwork and Documents
Corporate Bylaws
Corporate Charter
articles of incorporation
an application to operate as a corporation
corporate bylaws
rules by which a corporation must operate
corporate charter
a license to operate a corporation

28. Starting a Corporation
Types of Business Ownership
Chapter 3
Section 2
The Corporation
Starting a Corporation
Shares of stock in a corporation are bought by people who become known as stockholders.

29. Starting a Corporation
Types of Business Ownership
Chapter 3
Section 2
The Corporation
Starting a Corporation
Two Types of Corporations
Closely Held Corporation
Publicly Held Corporation

30. Starting a Corporation
Types of Business Ownership
Chapter 3
Section 2
The Corporation
Starting a Corporation
Advantages of the Corporation
Ability to raise capital
Limited liability
Continued life
Separation of ownership and management
– Board of directors
Individuals
Organizations
board of directors
group of individuals who are responsible for overseeing the general affairs of a corporation

31. Starting a Corporation
Types of Business Ownership
Chapter 3
Section 2
The Corporation
Starting a Corporation
Disadvantages of the Corporation
Complex and expensive setup
Slow decision-making process
Taxes
Individuals
Organizations

32. Starting a Corporation
Types of Business Ownership
Chapter 3
Section 2
The Corporation
Starting a Corporation

33. Limited Liability Company
Types of Business Ownership
Chapter 3
Section 2
The Corporation
Limited Liability Company
A limited liability company (LLC) combines some advantages of both the partnership and the corporation.
limited liability company (LLC)
a business that operates and pays taxes as a partnership but has limited liability for the owners

34. Types of Business Ownership
Chapter 3
Section 2
The Corporation
Franchise
If you start a franchise, you first organize your business as a sole proprietorship, partnership, corporation, or LLC.
franchise
a contractual agreement to sell a company’s products or services in a designated geographic area

35. Choosing the Form of Ownership
Types of Business Ownership
Chapter 3
Section 2
The Corporation
Choosing the Form of Ownership
Carefully consider the advantages and disadvantages of each form of ownership
A sole proprietorship or partnership may be best for a small start-up

36. 3 Types of Business Ownership Section 2 The Corporation
Chapter 3
Section 2
The Corporation
It is now possible to buy “do-it-yourself” incorporation kits. Judge whether you think this is a good idea or if an attorney should be used to handle the legal aspects of incorporating.
The kit may have all the forms, but you may not understand how to complete them.

37. Economic Systems 3 Types of Business Ownership Command Economy
Chapter 3
Economic Systems
Government makes the economic decisions of
Command Economy
What to produce
How it should be produced
For whom it should be produced
Market Economy
The three economic decisions are made in the marketplace.

38. Types of Business Ownership
Chapter 3

39. Types of Business Ownership
Chapter 3

40. End of