1. Introduction to Business
Chapter 6
Business Ownership

2. A business owned by only one person
Sole Proprietorship
A business owned by only one person

3. Responsibility for Decisions
Sole Proprietorship
Ownership
Start-up Costs
Taxes
Liability
Responsibility for Decisions
One person
Very hard to get financing; financing usually comes from owner, family and friends
Owner pays income taxes
Unlimited (full responsibility for your company’s debts)
All reside with the owner; all the glory and all the blame goes to the owner

4. Sole Proprietorship Advantages Disadvantages Easy to start
Get to be own boss
Keep all profits
Taxes are usually low
Have to pay for everything
Might also lack business skills
Unlimited liability

5. Partnership
A business owned by two or more persons who share the risks and rewards

6. Responsibility for Decisions
Partnership
Ownership
Start-up Costs
Taxes
Liability
Responsibility for Decisions
Two or more people
All partners can contribute which spreads the costs
Owners pay income taxes
Unlimited
Each partner can make decisions for all the partners, whether they agree or not

7. Partnership Advantages Disadvantages Easy to start
Easier to obtain capital
Partners might bring different skills
Share profit
Might not get along with partner
Unlimited legal and financial liability

8. A business owned by many people but treated by law as one person
Corporation
A business owned by many people but treated by law as one person

9. Responsibility for Decisions
Corporation
Ownership
Start-up Costs
Taxes
Liability
Responsibility for Decisions
Stockholders
Financing generally easy to get; also can acquire funds selling stock (shares of ownership)
Corporation is taxed; owners are also taxed on income
Limited (if company loses money, stockholders only lose what they invested)
Board of Directors elected by stockholders; officers carry out decisions of the board

10. Corporation Advantages Disadvantages Limited liability
Corporation doesn’t end if owners sell their shares
Raise more capital by selling new shares
Pay more taxes
More difficult to start
Running it is more complicated

11. Franchise
A contractual agreement to sell a company’s products or services in a designated geographic area

12. Franchise Ownership Advantages Disadvantages One or more people
Easy to start
Established name
Must operate as franchisor wants
Limited in what products or services you can offer

13. Nonprofit Organization
A type of business that focuses on providing a service rather than making a profit

14. Nonprofit Organization
Ownership
Advantages
Disadvantages
One or more people
Doesn’t have to pay taxes
No profit
Run by a board of directors

15. Cooperative
An organization owned and operated by its members for the purpose of saving money on the purchase of certain goods and services

16. Cooperative Ownership Advantages Disadvantages
Group of people with same interest
Pool resources
Save money as a group
Pay less in taxes than regular corporations
Decisions are made as a group