1. Select Forms of Business Ownership
Taking Care of Business
Select Forms of Business Ownership
Business Law LAP 2

2. Objectives
Summarize the advantages and disadvantages of the most common types of business ownership.
Demonstrate procedures for selecting a form of business ownership.

3. Objective
Summarize the advantages and disadvantages of the most common types of business ownership.

4. Google, Starbucks, Coca-Cola, Nike, McDonald’s, Sony, Disney
A few of the most famous companies in the world

5. They started out small.
They changed ownership structure as they grew.

6. You might own your own business someday.
You’ll need to know which ownership option best suits your needs and goals.

7. Weigh Your Options Ownership options include: Sole proprietorship
Partnership (general and limited)
Corporation
Hybrid

8. Weigh Your Options Know the pros and cons of each option.
Your choice affects taxation and government involvement.

9. Sole Proprietorship Advantages: Control Flexibility Ease of opening
Owner retention of all profits

10. Sole Proprietorship Advantages: Privacy
Ability to act quickly in making decisions
Tax advantages
Easy to close

11. Sole Proprietorship Disadvantages: Unlimited liability Limited capital
Limited capabilities
Uncertain life

12. Partnerships Advantages: Ease of start-up Combined resources
Decreased competition
Reduced expenses
Tax advantages

13. Partnerships Disadvantages: Unlimited liability Limited capital
Disagreements
Difficulty in ending
Uncertain life/transferability

14. Corporations Advantages: Limited liability Financial power
Unlimited life
Easy-to-transfer ownership
Skilled personnel

15. Corporations Disadvantages: Difficulty in forming and operating
More complex requirements
Dual taxation
Separate owners and managers

16. Hybrids LLC LLP Advantages: Limited liability Taxation
Cost to start and operate
Flexibility
Combined resources
Life span
LLC
LLP

17. Hybrids
Disadvantages:
LLC
Relatively few
No universal guidelines
LLP

18. Demonstrate procedures for selecting a form of business ownership.
Objective
Demonstrate procedures for selecting a form of business ownership.

19. Steps for Selecting a Form of Ownership
Determine the nature of the business.
Assess your desired level of independence or control.
Evaluate financial needs.
Examine willingness to assume risk.
Analyze your experience and abilities.

20. Steps for Selecting a Form of Ownership
Implement steps to legalize the business.
Take care of any copyrights, trademarks, or patents.
Obtain any necessary permits or certifications.

21. Steps for Establishing a Sole Proprietorship
Complete “Doing Business As” (DBA) form.
Pay registration fee(s).
Meet any health/safety requirements.

22. Steps for Establishing a Partnership
Verify certification; obtain permits; pay registration fees.
Make sure each partner understands his/her rights and responsibilities.

23. Steps for Establishing a Partnership
Have a partnership agreement (optional in general partnerships).
File a partnership agreement to operate a limited partnership.
Consult an attorney to develop the agreement.

24. Steps for Establishing a Corporation
Obtain the services of an attorney.
File for a charter with the state in which the business is located.
File “Articles of Incorporation,” if required.
Pay incorporation fees.

25. Steps for Establishing a Hybrid
Register with the state in which the business is located.
Pay necessary initial and annual fees.
File an operating agreement as the state requires.

26. Steps for Establishing a Hybrid
Obtain filing procedures and details from your local government.
Obtain legal advice, if needed.

27. Rhiannon’s sole proprietorship
She wants to incorporate—but doesn’t want to lose control.

28. She chooses distant friends and family for her board of directors.
Is this ethical?
What do you think?

29. MBAResearch Acknowledgments Original Developers
Christopher C. Burke, Sarah Bartlett Borich, MBAResearch
Version 1.0
Copyright © 2011
MBA Research and Curriculum Center®

30. Digital-based photography sources:
HEMERA PHOTO OBJECTS
Obj. B: #busiwri2
Photos copyright Hemera technologies Inc., P.O. Box Hull, Quebec, Canada J8Y 6V2

31. Copyright:
All photographic digital images on this CD are owned by the aforementioned photographic resources or their licensors and are protected by the United States copyright laws, international treaty provisions, and applicable laws. No title to or intellectual property rights to the images on this CD are transferred to you. These sources retain all rights and are not to be used, digitally copied, transferred, or manipulated in any way. To do so is a violation of federal copyright laws.