1. Forms of Business Organizations

2. Sole Proprietorship Simplest form of business ownership
Most flexible and easy to start
Most common form of business
Owned by only 1 person
Owner has unlimited responsibility for all debts and liabilities
Personal property is at risk

3. Partnership Owned by 2 or more individuals
Profits, losses, and debts are shared by the partners
Each partner is responsible for the other’s actions
Assume full personal liability

4. Limited Partnership At least one partner assumes unlimited liability
The other partners are only liable for the amount they have invested in the business

5. Franchise Purchase an already established business name and operation
Gives you the right to use an established trade name and logo
Can be very expensive
Must pay parent company portion of your sales

6. Corporations Considered an infinite legal entity (an artificial human)
Have continual existence
Limited liability
The corporation is liable for all debt, not the people who run it
Sell stock and may pay dividends

7. Types of Corporations Public Corporation
Established for a governmental purpose
Stock owned by one or a small number of shareholders
Example:
Incorporated Cities
State hospitals
State universities
Private Corporation
Established by private citizens for business or charitable organization
Stocks owned by a large amount of shareholders
Example:
Southwest Airlines
Walmart

8. Types of Corporations For-Profit
Private corporation organized to make a profit
Must pay taxes on earnings
Nonprofit
Organized for social, charitable, or educational purposes
Can not distribute dividends
Do not pay taxes

9. Requirements to Become Incorporated
File Article of Incorporation
Outline policy for disillusion
Issue a prospectus (state purpose of corporation)
States types of stock to be sold
Names all parties involved and their positions

10. Types of Stocks Preferred Stock Shareholders do not have voting power
Legally entitled to a stated dividend before other shareholders
Common Stock
Basic type of stock
Shareholders have voting power
Last people to get paid dividends