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Business Forms § Industry: • Group of one or more firms that produce identical or similar products. § Ex: § Business Firm: company, enterprise, and business all refer to an organization controlled by single management.
Sole Proprietorship § Business owned by one person. § Receives all profits and responsible for all debt. • Ex: § Liabilities: • Debts or obligations owed to others • Claims made against the firms assets § Account for 72% of all business firms and generate only 5% of all business revenue.
Partnership § Business owned by 2+ people who share ownership. § Legally binding partnerships clarify the amount of time and energy spent. • Ex. : § Account for 8% of all business firms and generate only 12% of all business revenue.
Corporation § Business organization managed on behalf of its owners, who provide the funds. • Charter: document that states nature of the business, the initial owners of the stock, and the types of stocks to be sold. § Stockholders: • Corporations fund initial start-up and expansion by selling stock (share in company).
Corporations § Board of Directors: • Stockholders elect policymakers. • Owners are responsible to directors and directors are responsible to stockholders. § Annual Corporation Report: • Once/year directors issue a financial status report to stockholders. § Account for 20% of all business firms and generate 83% of all revenues.
Special Business Types § S Corporation: • Small business enjoys corporation advantages without paying corporate income taxes (avoid double taxation). § Stockholders pay personal income taxes based on dividends received. • Can not have more than 35 stockholders and may not own 80% of another corporation.
Special Business Types § Limited Liability Companies (LLC): • Combines advantages of corporation and partnership. § Must have 2 or more members who own interest in the LLC and function as partners. § Member liability is limited because of corp. § Members are taxed as partners. § Property is held in name of LLC not names of members.
Special Business Types § Not-for-Profit Corporations: • Don’t try to earn a profit (not subject to income tax), but serve educational, social, charitable, or religious purpose. § Income includes: money from private foundations, govt. funding, and individual donations. § Cooperatives(Co-ops): • Associations of companies that perform functions for members. § Housing § Consumer § Producer
Special Business Types § Government-Owned Corporations: • Federal, state, and local owned and operated. § Generally when market doesn’t supply need for g/s. § Ex. : U. S. Postal Service, transit services, electric utilities etc.
Special Business Types § Franchises: • Method of distributing products or services that is governed by a contract. § License that entitles holder to operate individually owned business as if it were part of a large chain of stores. § Ex. : Subway, Dairy Queen, Radio Shack etc.