1. Forms of Business Ownership
Sole proprietorship
Partnership
Corporation

2. Forms of Business Ownership
Sole Proprietorship
Businesses owned and operated by one individual; the most common form of business organization in the world

3. Sole Proprietorship Sole Proprietorship -- Facts 80% of all businesses
E.g.,
Many restaurants
Hair salons
Flower shops
Dog kennels
Independent grocery stores
Sole Proprietorship -- Facts
80% of all businesses
Men more likely than women to start own business

4. Forms of Business Ownership
Advantages of a Sole Proprietorship
Ease and cost of formation
Secrecy
Distribution and use of profits
Flexibility and control of the business
Government regulation
Taxation

5. Forms of Business Ownership
Disadvantages of a Sole Proprietorship
Unlimited liability
Limited sources of funds
Limited skills
Lack of continuity
Lack of Qualified Employees
Taxation

6. Forms of Business Ownership
Partnership
A form of business organization defined by the Uniform Partnership Act as “an association of two or more persons who carry on as co-owners of a business for profit”

7. Forms of Business Ownership
Types of Partnerships
General partnership
Limited partnership

8. Forms of Business Ownership
General partnership
A partnership that involves a complete sharing in both the management and the liability of the business

9. Forms of Business Ownership
Limited partnership
A business organization that has at least one general partner, who assumes unlimited liability, and at least one limited partner whose liability is limited to his or her investment in the business.

10. Partnerships Advantages & Disadvantages
Ease of organization
Capital & credit
Knowledge & skills
Decision making
Regulatory controls
Disadvantages
Unlimited liability
Business responsibility
Life of the partnership
Distribution of profits
Limited sources of funds
Taxation of partnerships

11. Forms of Business Ownership
Corporations
Legal entities created by the state whose assets and liabilities are separate from its owners.

12. Forms of Business Ownership
Corporations
Typically owned by many individuals and/or organizations who own shares of the business – stock (shareholders or stockholders)

13. Corporations
Stock & Dividends
Stock – shares of a corporation that may be bought or sold
Dividends – profits of a corporation that are distributed in the form of cash payments to stockholders.

14. Corporations
Creating a Corporation
A Corporation is created (incorporated) under the laws of the state in which it incorporates. The individuals creating the corporation are called incorporators.

15. Corporations
Articles of Incorporation
Legal documents filed with basic information about the business with the appropriate state office.

16. Corporations Private corporation Public corporation
Types of Corporations
Private corporation
Public corporation
Quasi-public corporation
Non-profit corporation

17. Corporations
Types of Corporations
Private corporation – a corporation owned by just one or a few people who are closely involved in managing the business

18. Corporations
Types of Corporations
Public Corporation– a corporation whose stock anyone may buy, sell, or trade.

19. Corporations Types of Corporations
Initial Public Offering (IPO) – A private corporation who wishes to go “public” to raise additional capital and expand. The IPO is selling a corporation’s stock on public markets for the first time.

20. Corporations
Types of Corporations
Quasi-public corporation – Corporation owned and operated by the government (Ziraat Bank).

21. The Largest U.S. Corporations Fortune’s 2007 rankings of America’s largest corporations
Company
Revenues ($millions) 1
Wal-Mart
$378,799 2
Exxon Mobil
$372,824 3
Chevron
$210,783 4
General Motors
$182,347 5
Conoco Phillips
$178,558 6
General Electric
$176,656 7
Ford Motor
$172,468 8
Citigroup
$159,229 9
Bank of America
$119,190 10
AT&T
$118,928

22. Corporations
Types of Corporations
Non-profit corporation – focuses on providing a service rather than earning a profit but are not owned by a government entity (American Red Cross, Kizilay)

23. Board of directors Preferred stock Common stock
Corporations
Elements of a Corporation
Board of directors
Preferred stock
Common stock

24. Corporations
Board of Directors
Board of Directors – a group of individuals elected by the stockholders to oversee the general operation of the corporation who set the corporation’s long-range objectives.

25. Corporations Stock Ownership
Preferred stock – a special type of stock whose owners, though not generally having a say in running the company, have a claim to profits before other stockholders do.
Common Stock – stock whose owners have voting rights in the corporation, yet do not receive preferential treatment regarding dividends.

26. Corporations Advantages: Disadvantages: Limited liability
Transfer of ownership
Perpetual life
External sources of funds
Expansion potential
Disadvantages:
Double taxation
Forming a corporation
Disclosure of information
Employee-owner separation

27. Trends in Business Ownership
Mergers
Acquisitions

28. Other Types of Business Ownership
Merger – the combination of two companies (usually corporations) to form a new company
Acquisition – the purchase of one company by another, usually by buying its stock and/or assuming its debt.