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Forms of Ownership Coach Johnson. 3 Types of Ownership  Sole Proprietorship  Partnership  Corporation.

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Presentation on theme: "Forms of Ownership Coach Johnson. 3 Types of Ownership  Sole Proprietorship  Partnership  Corporation."— Presentation transcript:

1 Forms of Ownership Coach Johnson

2 3 Types of Ownership  Sole Proprietorship  Partnership  Corporation

3 Sole Proprietorship Overview  Owned and Controlled by one person  Oldest, simplest, most common  Examples include: lawyers, plumbers, carpenters, hairstylists, florists, and farmers  Advantages? Disadvantages?

4 Sole Proprietorship Advantages:  Easy start up Small Capital and few legal consideration Zoning and Licenses may be required  Not difficult to obtain  Control Take opportunities, react to troubles Personal satisfaction

5 Sole Proprietorship Advantages:  Profits Stay in house  Major decision in choosing this type  Taxation Individual not business

6 Sole Proprietorship Disadvantages:  Unlimited Liability Personally responsible for all goods and bads  Sole Responsibility All aspects of running business Time, energy, decision making

7 Sole Proprietorship Disadvantages:  Limited Growth Potential Small loan or Savings Difficulty getting loan  Collateral House Car More Capital = Expansion

8 Sole Proprietorship Disadvantages:  Longevity Firm/Business life Depends on owns:  Health  Hard Work  Time  Effort

9 Sole Proprietor Activity 1. Name three challenges facing a sole proprietorship 2. Name two types of careers we discussed 3. Name the two main advantages for being a sole proprietor 4. How is a sole-proprietor taxed?

10 Partnerships  Owned and Controlled by two or more people  Advantages? Disadvantages?  Examples include: Doctors, lawyers, accountants, and construction companies

11 Partnerships Overview  General partnerships Enjoy equal decision-making authority Each has unlimited liability  Limited Partnership Provide financial capital in exchange for a share of the profits  Rarely take an active role in business decisions Liability is limited for some partners

12 Advantages of Partnerships Easy start up Low costs and few government regulations Partnership contracts Outline responsibilities of each Includes conditions for adding/dropping partners, and dissolving the partnership

13 Advantages of Partnerships Specialization Each can have different duties Helps realize specific talents Pizza Business Example Shared Decision Making & Loss Minimize the chance of mistakes Secure capital easier than sole Take hit = keep going

14 Partnership Disadvantages  Unlimited Liability Can lose more than you invest Still not a large number of owners, much risk  Conflict Difference of opinions  Lower morale  Delay decisions  Affect overall efficiency

15 Partnership Disadvantages Lack of longevity Willingness and Ability of teamwork Illness Death Conflict

16 Partnerships Assignment  Take a few minutes to research partnership contracts online.  Imagine that you are opening a business with one partner – create an outline that details some of the items you would include in your partnership contract.  See examples 1-Contract 1 2-Outline 2

17 Corporations  A corporation – group of owners (stockholders) share profits (and losses)  Corporations can own property hire workers make contracts pay taxes sue and be sued make and sell products

18 Corporate Advantages  Benefits for Stockholders Limited liability (only as much as they invest) Can sell ownership at any time  Benefits for Corporations Founders have limited liability Separation of ownership from management Easy to raise capital Longevity

19 Corporate Disadvantages  Corporate Issues Corporate charters  expensive and difficult to obtain Federal and state governments regulate corporations Slow decision-making process (idea, discuss, present, vote, act)

20 Corporate Disadvantages  Stockholder Issues Earn profit without actually working for the company Lack of control  Shared Issues Corporate profits are TAXED TWICE!!  Corporate income  Dividend income


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