1. The Different Types of Business Ownership

2. Sole Proprietor A business owned and operated by one person. The owner is responsible for all operations of the business and assumes all the risk.

3. Advantages of a sole proprietorship Owner makes all decisions Owner is her or her own boss Owner keeps all the profits All financial information can be kept secret This type of business is easy to start or close

4. Disadvantages of a sole proprietorship Owner has responsibility for all debts Costs and time commitment can be high Funding can be difficult to obtain Owner is responsible for all aspects of the business Owner doesn’t have fringe benefits

5. Partnership a form of business organization in which two or more people own and operate the business together

6. Advantages of a partnership Partners co-own the business They share responsibilities They may have greater financial resources than sole proprietors They share business losses They share time commitment

7. Disadvantages of a Partnership Partners have unlimited personal liability for all the other partners They may have conflicts Profits are shared Partnerships are more difficult to close down than sole proprietorships Agents of the business dillemma

8. TYPES OF PARTNERSHIP I. GENERAL PARTNERSHIP- in association of two or more persons, each with unlimited liability, who are actively involved in the business. II. LIMITED PARTNERSHIP- is an arrangement in which the liability of one or more partners is limited to the amount of assets they have invested in the business

9. TYPES OF GENERAL PARTNERS (a) Active Partner A partner who takes active part in the day to day management of the business is cared an active partner. (b) Sleeping Partner A sleeping partner is one who contributes capital, shares profits and losses of the firm but takes no part in the day to day management of the affairs of the firm.

10. OTHER TYPES OF PARTNERS (a) Secret Partner A partner who takes active part in the affairs of a business but is not known to the public as a partner is called Secret partner (b) Nominal Partner nominal partner lends his name for the goodwill and credit worthiness to the firm. He neither contributes capital nor takes active part in the management of business.

11. OTHER TYPES OF PARTNERS (c) Minor Partner Partnership is a contract and a contract with minor is void. Under Section 30 of Partnership Act, a minor is not able to enter into a contract and so he cannot become a partner of a firm. He can, however be admitted to the benefits of a firm with the consent of other members and that too n a business which is already operating.

12. OTHER TYPES OF BUSINESS (d) Partner at Will -type of partner will continue so long the partners have mutual faith, trust and confidence among them. (e) Partners In Profit Only If a partner is entitled to receive certain share of profit and is not held liable for the losses, he is known as partner in profit only. He is not allowed to take part in the management of the business. (f) Partner by Estoppel There is another minor type of partner which is called partner by estoppel. If person styles the character of a partner in a business before a third party (outsiders) by words or in writing or by his act, he is called a partner by estoppel. The third party mistaking him as a partner in the business advances loans on his creditability, that person would be personally responsible for the liability attaching to the position of a partner The partner by estoppel would, however, not be entitled to any right like other partners in the business. For example Mr. Hamid is a rich man and is not a partner in a firm named Three Star Carpets. Mr. Hamid makes a false statement to Mr. Rauf, that he is a partner of the firm Three Star Carpets. On this impression Mr. Rauf sells carpets worth Rs. one million to “Three Star Carpets” on credit. The firm is not able to pay the amount of Rs, one million. Mr. Rauf can recover the amount of Rs. one million from Mr. Hamid, Mr. Hamid here is a partner by Estoppel.

13. Corporation A legal entity that exists independently of its owners Owners are called shareholders

14. Advantages of a corporation The owners are shareholders. They have limited liability for the debts of the corporation and share the profits Usually shareholders do not operate the company – they hire employees to do so Corporations can usually raise funds more easily than sole proprietors or partners

15. Advantages of a corporation Corporations usually have a lower tax rate than private owners A corporation can contninue to exist after the death of its owners

16. Disadvantages of a corporation Corporations have more complicated structures than sole proprietorships or partnerships Employees who are not owners may not be committed to the business

17. Disadvantages of a corporation Corporations must publish annual reports, which could give away important secrets to competitors The value of company shares can change depending on changes in the stock market

18. Co-operative Businesses owned and operated by a group of people with a strong common interest Start-up costs are shared among the members of the co-operative Members own and control the business and make all business decisions

19. Advantages of a co-operative Members own and control the business Members share the start-up costs and the running of the business They share the financial risk Members may pay less for goods and services and get more for those they sell

20. Disadvantages of a co-operative Because each member only has one vote, members may not want to invest money for expansion Because of the number of members, making decisions can be difficult Members can have conflicts

21. TYPES OF COOPERATIVE CREDIT UNION- It accepts deposits from the members and lends money to its members at very reasonable interest rate. PRODUCERS COOPERATIVE- Its purpose is to actually assist one another procurement of raw materials, machinery, equipment and other time saving devices.

22. TYPES OF COOPERATIVE MARKETING COOPERATIVE- Its purpose is to assist members in the marketing of their produce. CONSUMERS COOPERATIVE- Its purpose is to assist members in the marketing of their produce. SERVICE COOPERATIVE-Its purpose is to make services readily available and at a lower price

23. Franchise A business in which a franchisor sells to another person, called the franchisee, the rights to use the buness name and to sell a product or service in a given territory

24. Advantages of a franchise Franchisees buy a business with a good reputation Franchisors supply training and financial knowledge Franchisors usually provide packaging, advertising, and equipment to the franchisee

25. Disadvantages of a Franchise Franchises can be expensive to buy Franchisees may have to follow a lot of rules laid down by the franchisors If a franchisor’s business fails, so will the franchisee’s business