1. Forms of Business Organizations
Darius Blanding & Amber Brown
Forms of Business Organizations

2. Day One Sole Proprietorships “Me, Myself, & I”

3. SOLE PROPRIETORSHIP
A business that is owned and managed by one individual who receives all the profits and bears all the losses.

4. Benefits: Sole Proprietorship
Ease of starting and going out of business
Control over profits and business operations
Pride of ownership
Lower taxes (pays no corporate income taxes)

5. Costs: Sole Proprietorship
Unlimited liability
Difficulty in raising financial capital
Responsible for all losses
Management knowledge may be limited

6. Vocab
Unlimited liability- owner is fully responsible for any problems with the company
Inventory- stock of goods
Limited life- the business ends if the owner dies or quits

7. Some Advantages Easy to start
Owner doesn’t have to share profits with no one
Owners enjoy being boss
Easy to end business

8. Some Disadvantages Unlimited liability
Trouble raising financial capital
May not afford to pay enough workers
Limited life

9. Quick Quiz

10. What is unlimited liability?

11. What are 3 advantages sole proprietorship
What are 3 disadvantages of a sole proprietorship?

12. Owner is fully responsible for any problems with the company
What is unlimited liability?
Owner is fully responsible for any problems with the company

13. Advantage Disadvantage
Unlimited liability
Trouble raising financial capital
May not afford to pay enough workers
Limited life
Easy to start
Owner doesn’t have to share profits with no one
Owners enjoy being boss
Easy to end business

14. Day Two Partnerships “It Takes Two”

15. PARTNERSHIP
A business that is owned and managed by two or more individuals who receive all the profits and bear all the losses.

16. Benefits: Partnership
Easier to raise financial capital
Partners may combine managerial skills
Personal satisfaction
Lower taxes (pays no corporate income taxes)

17. Costs: Partnership Unlimited liability Shared profits
Possible conflicts between partners
Possible instability after death of a partner

18. Vocab
Limited partnership- when at least one partner doesn’t take part in running the business
Bankruptcy- court permission to delay debt payments

19. Some Advantages Easy to start Easy to manage
Easier to obtain money than a sole proprietorship
Easy to attract talented workers

20. Some Disadvantages Each partner is responsible for what the other does
Limited life
Partners don’t always agree
May be forced to file bankruptcy

21. Quick Quiz

22. 1. What is bankruptcy-

23. List 3 advantages of limited partnership

24. List 3 disadvantages of limited partnership

25. Bankruptcy – Court permission to delay debt payments
What is bankruptcy-
Bankruptcy – Court permission to delay debt payments

26. Advantages Easy to start Easy to manage
Easier to obtain money than a sole proprietorship
Easy to attract talented workers

27. Disadvantages Each partner is responsible for what the other does
Limited life
Partners don’t always agree
May be forced to file bankruptcy

28. Day Three Corporations “All For One”

29. CORPORATION
A business that is owned by stockholders and has rights and responsibilities as if it were a person.

30. Benefits: Corporation
Limited liability
Greater financial capital
Unlimited life
Specialized management

31. Costs: Corporation Increased taxation (pays corporate income taxes)
Difficulty in starting (each state has its own rules for a corporate charter)
May be larger, more bureaucratic than other forms of business
Increased government control

32. Vocab Charter- document that allows people to form an corporation
Stocks- partial ownerships in a corporation
Stockholders- people who buy stocks
Dividend- portion of a company’s earnings
Bond-written promise to pay back a loan
Principal-amount of money borrowed
Interest- price paid to use someone else's
money
Double taxation- a company’s profit is
taxed twice

33. Some Advantages
Stockholders don’t have to have a lot of knowledge about the business
Stockholders have limited liability
Continues to function even if the owners die or sell their shares

34. Some Disadvantages Difficult and expensive to get a charter
Stockholders have little affect on the company
Government has more rules than any other business

35. Quick Quiz

36. What is the relationship between stocks and stockowners?

37. What is the purpose of a charter?

38. Which type is best? Depends on your situation!
They all have strengths and weaknesses.

39. Stockholders buy/own stock
What is the relationship between stocks and stockowners?
Stockholders buy/own stock

40. Allow people to form a corporation
What is the purpose of a charter?
Allow people to form a corporation