1. Types of Business Ownership - Sole Proprietorship - Partnership - Corporation

2. Sole Proprietorship
FUN FACT: about ¾ of all businesses are sole proprietorships
FUN FACT: many are family-owned businesses that have been passed on from generation to generation

3. Sole Proprietorship Ownership – one person
Start-up Costs – very hard to get financing from a bank, usually comes from owner, family & friends
Taxes – The business profits all go to the Owner who pays income taxes

4. Sole Proprietorship
Liability – unlimited liability; owner is personally responsible for any company debts or losses; if it loses money you have to make up the difference!
Responsibility for Decisions - totally up to the owner; no one else has a say!
Pros & Cons - life of the business is limited to the interest & participation of the owner

5. Partnership

6. Partnership Ownership – 2 or more people
Start-up Costs – hard to get financing but some banks are more willing to lend to partnerships, usually all the partners contribute which spreads the costs
Taxes – Profits get divided up to each or the partners & partners pays income taxes

7. Partnership
Liability – unlimited liability; owners are personally responsible for any of the company’s debts or losses; if one partner makes a bad decision like buying stolen equipment you could end up in jail with him.
Responsibility for Decisions - Each partner can make decisions for all the partners (whether they agree or not!)
Pros & Cons - partnership agreement to spell out the rights & responsibilities of the partners; partners bring different skills & resources to the business

8. Corporation

9. Corporation Ownership – many people known as stockholders
Start-up Costs – easy to get financing, can acquire funds by selling stock
Taxes – Corporation is taxed and owners are taxed on income

10. Corporation
Liability – limited liability; stockholders (owners) are NOT personally responsible for any of the company’s debts or losses; can only lose how much they invested in the company
Responsibility for Decisions - Board of Directors voted in by stockholders. Company officers carry out their decisions.
Pros & Cons - Legal paperwork & financial reporting is greater; long life of business is possible

11. Alternative Ways to Do Business
Franchise
Agreement to sell a company’s products/services in a designated geographic area
you pay franchisor an annual fee or % profits
Can be sole proprietorship, partnership or corporation
Pros: easy to start; proven business model ; good choice if you lack “business know how”
Cons : Strict rules about how business is run, if unprofitable you still must pay the franchisor

12. Alternative Ways to Do Business
Nonprofit Organization
Business focused on providing a service instead of making a profit.
Examples: American Red Cross, YMCA, Meals on Wheels, Churchs
Registers with government (501c Corporation) and often run by a Board of Directors
Does NOT pay taxes