1. Virtual Business Management
Lesson 8- “Forms of Ownership-Capital”

2. Objective
Students should show an understanding of the capital implications of choosing between a sole proprietorship, partnership, and corporation.

3. Collateral
Collateral is the term for property or financial assets that you pledge against a loan

4. Capital
Capital refers to money invested in a business.

5. Sole Proprietorship
In general, compared to a sole proprietorship, a partnership with 5 partners will have access to more initial capital.
In a sole proprietorship, you get 100% percentage of the earnings.

6. Partnership
In a partnership, the business will often receive more capital as more partners contribute money.
A main advantage of a partnership is access to more initial capital, better qualification for loans, and taxation only at the personal level.

7. Question:
Question: If you start a partnership with 4 equal partners, your share of profits will be:
15%
20%
25%
33%

8. Question:
Question: You contribute $20,000 to your partnership as do the other five partners. A bank gives you a loan matching all the contributed partner capital. What is your initial cash?
$120,000
$240,000
$100,000
$200,000

9. Question
Question: You join a partnership with 3 others. Your friend starts his own business. The earnings of your business will need to be what percent higher than his for you to take home the same amount.
100%
200%
300%
400%

10. Corporation:
A corporation is a business that sells shares of the business (stock) to others in exchange for capital.

11. Question:
Question: You own one third of the shares of a corporation that earned $600,000 after tax last year and paid out that entire amount as dividends. Your dividend tax rate is 15%. What was the amount of your dividend check?
$15,000
$30,000
$45,000
$60,000