1. Types of Business Ownership

2. Standard/Element
BMA-IBT-7: Demonstrate an understanding of entrepreneurship through recognizing a business opportunity, how to start a business based on the recognized opportunity, and basics of how of operate and maintain that business.
7.6: Differentiate between the types of business ownership.

3. Types of business ownership
Sole Proprietorship
Partnership
Franchise
Corporation

4. Sole proprietorship A business owned by only one person Advantages
Complete control
Sole decision maker
No corporate tax payments
Minimal legal costs
Few formal business requirements
Disadvantages
Personally liable for all debt
Assumes all risks of business
Business decisions rely solely on you
Investors are slow to invest

5. Partnership
A business owned by two or more people who share its risks and rewards
Advantages
Easy to format
Diverse skills ad expertise
Large resources
Flexibility of operations
Sharing of risks
Benefits of unlimited liability
Promptness in decision making
Disadvantages
Limited capital
Unlimited liability
Instability
Risk of implied authority
Lack of harmony
Non-transferability of interest
Lack of public confidence

6. corporation
Company that is registered by a state and operates apart from its owners.
Advantages
Shareholders have limited responsibility
Can obtain more capital through sale of actions
Can deduct the cost of benefits offered to employees
Disadvantages
Requires more time to integrate
Supervised and subject to rules of entities
Payment of more taxes

7. franchise
Contractual agreement to use the name and sell the products and services of a company in a designated geographic area.
Advantages
Owning an established business
A known brand
Simpler business financing
Business relationships
Support and security
Less likely to fail
Disadvantages
Having no control
Ties to suppliers
Risks from others
Franchise costs
Cut of your profit

8. Student should complete worksheet on Matching Activity

9. Other useful terms to know
Unlimited liability: a liability that holds the owner fully responsible for a company’s debts
Limited liability: A claim that holds a firm's owners responsible for no more than the capital that they have invested in it.
Cooperative: Organization that is owned and operated by its members.
Nonprofit organization: A type of business that focuses on providing a service rather than making a profit.
Sole: having no sharer; being the only one
Income: A gain or recurrent benefit usually measured in money that derives from capital or labor.
Regulate: to bring under control of law or constituted authority

10. Business ownership project
Please see handout provided