1. Business Organizations
1. Sole Proprietorship
2. Partnership
3. Corporation

2. 1. Sole proprietorship-- a
business owned and operated
by one person.

3. Advantages:
-easy to establish
-owner has direct control
-owner gets all profit
-freedom
-personal satisfaction
-easy to get out
-no special taxes

4. Disadvantages
-owner has unlimited liability
-difficult to raise financial
capital
-business must be certain size
-requires “business sense”
-difficult finding skilled
workers

5. 2. Partnership-- business
run by 2 or more.

6. Advantages
-easy to establish
-no special taxes
-easier to attract financial
capital
-efficiency easier (it’s larger)
-easier to attract skilled workers

7. Disadvantages
-Unlimited liability
-All partners share profits
-Limited life-- firm legally
stops if partner quits, dies, or
new one is added.

8. 3. Corporations--form of
business that is recognized
as a separate and legal
entity.

9. How to Start a Corporation
1. Get permission from state
where headquarters will be.
2. Pay for and obtain charter.
3. Sell stock to shareholders.

10. Advantages
-easy to raise money
-can hire best talent
-limited liability--shareholders
only lose profits.
-unlimited life--continues
to exist even
when ownership
changes.

12. Disadvantages
-difficult and expensive to
get a charter
-owners and shareholders have
little say in business.
-has to pay business income tax.
-more gov’t regulations

13. 1. Corporations raise more money than
Two truths and a lie:
1. Corporations raise more money than
other businesses by selling stock.
Sole Proprietorships and Partnerships
seem to have more in common with
one another than with corporations.
All business organizations are seen as
individuals to ensure limited liability to
the owners.