1. Business

2. Business Facts A person that starts a business is an entrepreneur. Four elements of business: 1. Expenses: What you need to purchase to start and continue a business. 2. Advertising: Introduce your business. 3. Receipts and record keeping: Accurate and dependable. 4. Risk: (profit vs. loss) Balance risk against advantage of being in business. Ideas to consider: –Establish an inventory for any relating job. –Use computers. Buy programs to keep track of expenses. –Time: Consider opportunity cost. You could be working for someone else.

3. Business Types There are three main types of businesses. They differ in size and in daily operations. Sole-Proprietorship Partnership Corporation

4. Sole-Proprietorship Business owned by one person. Advantages Receive all profits Quick decisions Relatively low taxes Disadvantages Unlimited liability Handle all decisions Time consuming Rely on own funds Business depends on one person

5. Partnership Business owned by two or more individuals Advantages Losses are shared More efficient than proprietorships Pay taxes on your share of the profit Easier to borrow money Disadvantages Profits are shared Unlimited liability Must reach agreements Committed partners

6. Special Partnerships Limited partnership: Partners are not equal. –General partner: Majority of control. –Limited partner: Own a small part of the business. They do not voice opinions. They are only responsible for what they put in. –Joint Ventures: Temporary partnership to do a job.

7. Corporations Owned by many. Treated as one person. –Started by a founder and owned by stockholders. –State government issues a corporate charter to run the business.

8. Duties of Corporate role players Founder Register the company with the state government. Sell stock. Select the initial board of directors. Board of Directors Stockholders elect the board annually. Supervise and control the corporation.

9. Advantages and Disadvantages Advantages Owners do not have to devote time to make money. Stockholders have limited liability; they only lose what they put in. Individuals trained in specific areas make decisions. Disadvantages Decisions are slow. Interest of the board may differ from the stockholders. Double taxation. Govt. taxes corporate profit than individual shares. Stockholders have little or no say in how business is run.

10. Stocks and Bonds Stock: Individual ownership in a corporation. Shareholder receives voting rights and dividends. Bond: Promise by a corporation to pay a stated amount of interest over a period of time.

11. Franchises A business uses an already established name. Franchiser: Sells the name. Help train employees and set up the business. Franchisee: Person buying the name. Pay a start-up fee and an annual fee.