1. For Reals Today: Business Organizations
Types of Businesses
Videos: Shark Tank
But first…

2. The Role of Sole Proprietorships
business organization: An establishment formed to carry on commercial enterprise.
sole proprietorship: A business owned and managed by a single individual

3. Characteristics of Proprietorships
Most sole proprietorships earn modest incomes.
Many proprietors run their businesses part-time.

4. Advantages: Sole Proprietorships
Relatively Few Regulations
Sole Receiver of Profit
Full Control
Easy to start/discontinue
Least expensive
Maybe subject to zoning laws: law in a city or town that designates separate areas for residency and for business.

5. Disadvantages of Sole Proprietorships
limited access to resources, such as physical capital.
lack permanence.
Most don’t offer fringe benefits: payment other than wages and salaries.
Unlimited liability. Liability: the legally bound obligation to pay debts.
Inventory
Limited life

6. Types of Partnerships
Partnership: a business organization owned by two or more persons who agree on a specific division of responsibilities and profits. Partnerships fall into three categories:
General Partnership
In a general partnership, partners share equally in both responsibility and liability.
Limited Partnership
In a limited partnership, only one partner is required to be a general partner, or to have unlimited personal liability for the firm.

7. Some Advantages of Partnerships
Partnerships offer entrepreneurs many benefits.
1. Ease of Start-Up
2. Shared Decision Making and Specialization
3. Larger Pool of Capital
4. Taxation
Not subject to business taxes

8. Disadvantages of Partnerships
Unless the partnership is a limited liability partnership, at least one partner has unlimited liability.
General partners are bound by each other’s actions.
Potential for conflict.

9. Corporations TERMS Charter Stock Stockholders Dividend Common stock
Preferred stock

10. Advantages/Disadvantages
Bond double taxation
Principal
interest

11. Business Franchises
business franchise is a semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area.
Franchisers develop products and business systems, then local franchise owners help to produce and sell those products.
Franchises allow owners a degree of control, as well as support from the parent company.
Franchisor
franchisee