1. Types of Business
Chapter 22.1, 22.3

2. Vocab – Unit 2 – part 1 Reveal Corporation Transparency
Charter (2nd definition)
Discrimination
Social Responsibility
Stock
Sole proprietorship
Stockholder
Partnership
Financial Capital
Articles of Partnership
Unlimited Liability (p.601)
Board of Directors
Cooperative

3. Business Types
There are three main types of businesses. They differ in size and in daily operations.
Sole-Proprietorship
Partnership
Corporation

4. 3 Types of Businesses Sole Proprietorship Owned by 1 person
Easy & relatively inexpensive to start
Typically small businesses
Most common form of business ~73% of all businesses

5. Sole Proprietorship Advantages Receive all profits
Quick decisions – don’t have to consult with other owners
Relatively low taxes
Disadvantages
Unlimited liability
Handle all decisions
Time consuming
Rely on own funds
Business depends on one person

6. 3 Types of Businesses cont.
2. Partnership
Owned by 2 or more individuals
Articles of Partnership – Partners sign an agreement on what each is responsible for.

7. Partnership Advantages Losses are shared
More efficient than proprietorships
Pay taxes on share of profit
Easier to borrow money
Disadvantages
Profits are shared
Unlimited liability, most of the time
Must reach agreements
Committed partners

8. Started by a founder who gets a charter –
3. Corporation -
Business has some of the same rights and responsibilities as individuals
Can - own property, sue or be sued, pay taxes
Started by a founder who gets a charter –
issued by the state gov’t granting permission to start the business
Describes the business and amount of stock that will be issued
Owned by Stockholders Run by an elected Board of Directors
Complicated structure
Are Double Taxed – 1. Corp. pays a tax on its profits. 2. After profits are distributed to the stockholders – stockholders pay a tax on those earnings.

9. Advantages
Raise financial capital by selling new shares of stock
Owners do not have to devote time to make money.
Stockholders have limited liability; they only lose what they put in.
Individuals trained in specific areas make decisions – CEOs/CFOs
Disadvantages
Decisions are slow. Interest of the board may differ from the stockholders.
Double taxation. Govt. taxes corporate profit then individual shares.
Stockholders have little or no say in how business is run.
Expensive start up
Subject to more gov’t regulations

10. Other Types of Businesses
Franchise – sell the name & structure of a business
Help train employees & set up the business
Franchisee – pays a start up fee & annual fee
Non – Profit – Making a profit is not the main purpose of the business
Cooperative – individual businesses that work together to benefit all members
Producer – Ex: Farmer’s Market
Consumer – Ex: PCC Natural Markets, REI
Service – Ex: Credit Unions, Utility companies

11. In 1-2 sentences write the main characteristics of the following -
Sole Proprietorship
Corporation
Partnership
Charter
Articles of Partnership
Board of Directors
Stock
Transparency
Unlimited liabilty
Cooperative

12. Roles of Business 1. Responsibilities to Consumers
2. Responsibilities to Owners
3. Responsibilities to Employees
4. Responsibilities to the Community

13. Responsibilities to Consumers
Sell products that are safe
Products should work as promised
Be truthful in advertising
Treat all customers fairly

14. Responsibilities to Owners
To protect stockholders – to do this they -
Reveal – making public/making known important financial information
Transparency – Not hiding. Making business activities visible for everyone

15. Responsibilities to Employees
Provide a safe workplace
Treat all workers fairly and without discrimination
* Basis of race, religion, color, gender, age, or disability

16. Responsibilities to the Community
Social responsibility – obligation to pursue goals that benefit society as well as themselves.
ex – charitable gifts, national volunteering, assisting disaster victims through relief agencies.

17. What did you do? Did the business try to fix the problem?
Think about a personal experience in which a product you purchased was flawed?
What did you do? Did the business try to fix the problem?

18. Exit Ticket
Think about the different business responsibilities we talked about today – Responsibilities to consumers, owners, employees and community. Which of these makes the biggest impact on your community? Why?
This should be at least one paragraph – 5 sentences.