1. Forms of Business Organization

2. 3 Basic forms of organization 1) Single Proprietorship

3. 3 Basic forms of organization 1) Single Proprietorship Form of business organization that places full responsibility on a single owner

4. 3 Basic forms of organization 1) Single Proprietorship Form of business organization that places full responsibility on a single owner  It is the easiest type to organize

5. 3 Basic forms of organization 1) Single Proprietorship Form of business organization that places full responsibility on a single owner  It is the easiest type to organize  Places responsibility on the owner

6. 3 Basic forms of organization 1) Single Proprietorship Form of business organization that places full responsibility on a single owner  It is the easiest type to organize  Places responsibility on the owner  Positives Have power to make decisions

7. 3 Basic forms of organization Negatives Prevents sharing of responsibility

8. 3 Basic forms of organization Negatives Prevents sharing of responsibility Subject to unlimited liability, which allows courts to take the personal property of owners to satisfy claims against firm

9. 3 Basic forms of organization Negatives Prevents sharing of responsibility Subject to unlimited liability, which allows courts to take the personal property of owners to satisfy claims against firm Difficult to raise $, solely based on personal wealth of the owner

10. 3 Basic forms of organization Negatives Prevents sharing of responsibility Subject to unlimited liability, which allows courts to take the personal property of owners to satisfy claims against firm Difficult to raise $, solely based on personal wealth of the owner Limited Life, when the owner dies, so does the business

11. 3 Basic forms of organization Partnership- a form of business organization with two or more owners

12. 3 Basic forms of organization Partnership- a form of business organization with two or more owners This is the least common form

13. 3 Basic forms of organization Positives Can raise more money

14. 3 Basic forms of organization Positives Can raise more money Can share responsibility while still having power

15. 3 Basic forms of organization Negatives Responsible for partner’s debt

16. 3 Basic forms of organization Negatives Responsible for partner’s debt Unlimited liability

17. 3 Basic forms of organization Negatives Responsible for partner’s debt Unlimited liability Limited life

18. 3 Basic forms of organization Corporation- a form of business organization that requires a governmental charter granting them specific powers

19. 3 Basic forms of organization Corporation- a form of business organization that requires a governmental charter granting them specific powers The most difficult to start

20. 3 Basic forms of organization Positives Raise money through the sale of stock or corporate bonds

21. 3 Basic forms of organization Positives Raise money through the sale of stock or corporate bonds  Stock-part ownership of company

22. 3 Basic forms of organization Positives Raise money through the sale of stock or corporate bonds  Stock-part ownership of company  Corporate bond- a loan to a company

23. 3 Basic forms of organization Positives Raise money through the sale of stock or corporate bonds  Stock-part ownership of company  Corporate bond- a loan to a company

24. 3 Basic forms of organization Positives Con’t Limited liability- individual owners cannot be sued

25. 3 Basic forms of organization Positives Con’t Limited liability- individual owners cannot be sued Unlimited life, corporation carries on even if owner dies

26. 3 Basic forms of organization Negatives Legal control of the corporation is determined through voted stock  Majority vote determines most major decisions

27. 3 Basic forms of organization The Costs of Production

28. 3 Basic forms of organization The Costs of Production Fixed Costs-expenses that must be paid no matter the quantity produced

29. 3 Basic forms of organization The Costs of Production Fixed Costs-expenses that must be paid no matter the quantity produced  Ex. Mortgage, property tax

30. 3 Basic forms of organization The Costs of Production Fixed Costs-expenses that must be paid no matter the quantity produced  Ex. Mortgage, property tax Variable Costs- expenses that change with the quantity produced

31. 3 Basic forms of organization The Costs of Production Fixed Costs-expenses that must be paid no matter the quantity produced  Ex. Mortgage, property tax Variable Costs- expenses that change with the quantity produced  Ex. Wages and raw materials

32. 3 Basic forms of organization Most new businesses underestimate the fixed costs

33. 3 Basic forms of organization Most new businesses underestimate the fixed costs Causing them to under produce their product, or sell at too low of a price

34. 3 Basic forms of organization Most new businesses underestimate the fixed costs Causing them to under produce their product, or sell at too low of a price One way to fix this is to sell more products

35. 3 Basic forms of organization Most new businesses underestimate the fixed costs Causing them to under produce their product, or sell at too low of a price One way to fix this is to sell more products  Ex. If your fixed costs are $100 (rent, tax) and you sell 100 items, your fixed cost per product is $1

36. 3 Basic forms of organization Most new businesses underestimate the fixed costs Causing them to under produce their product, or sell at too low of a price One way to fix this is to sell more products  Ex. If your fixed costs are $100 (rent, tax) and you sell 100 items, your fixed cost per product is $1  Increase to 1000 products and your fixed cost per product is $.10