- Slides: 16
Business Ownership • Sole Proprietorship • Partnership • Corporation • Franchise
Sole proprietorship • A business owned and run by one person • The business is typically managed by the owner. • Formation varies by state.
Advantages • • Easy to start up Complete control of the business Owner receives all the profits Limited taxes (one time taxation)
Disadvantages • Limited capital (money) • Unlimited liability (responsible for ALL debt) • The business is limited to the lifetime of the owner
Partnership • A business owned and controlled by two or more people who have entered a written agreement • The management of the company depends on the partnership agreement.
Advantages • • • More capital and credit available than a sole proprietorship Combined resources (money, expertise) Shared management responsibilities Shared risk Work load easier to manage than a sole proprietorship
Disadvantages • • Profits are shared Responsible for each others decisions Potential for disagreement among partners Unlimited liability (depending on type)
Corporations • An organization owned by one or more shareholders and managed by a board of directors. • Ownership – Determined by purchase of stock – A stockholder, or shareholder, owns a ‘piece’ of the company – One share of common stock equals one vote
Advantages • Easier to obtain capital • Limited liability for shareholders • Life of the corporation is unlimited
Disadvantages • Double taxation (profits and earnings) • Government regulations and legal restrictions • Decision-making shared among managers, board of directors, and shareholders
Franchise • Permission to operate a business to sell products and services in a set way • Begins with a parent company who owns the product or service and grants the right to another business • Franchiser: the company that owns the product • Franchisee: the company purchasing the right to run the business
What Business Ownership Type did you choose and why? 1. Tom, Sally, and Joan created a new video game that is selling over a thousand units per day! Angry Birds was created by a 15 year old student!
What Business Ownership Type did you choose and why? 2. Bob wants to start a lawn service.
What Business Ownership Type did you choose and why? 3. Cousin Walter wants to open a hotel and would like people to invest in it.
What Business Ownership Type did you choose and why? 4. Aunt Vivian wants to own her own Subway shop. http: //www. naturallyintense. net/blog/wpcontent/uploads/2009/11/subway-eat-fresh. jpg
What Business Ownership Type did you choose and why? 5. Your neighbors want to start a farmer’s market so everyone can have fresh vegetables and earn a little cash.