Business Structures Three different business structures u Sole

Business Structures

Three different business structures u. Sole u Proprietorship Partnership u. Corporations

Make a chart Sole Proprietorship Who owns the business? Advantages Disadvantages Partnership Corporation

Who owns a sole proprietorship? ❖One owner or single-family owned

Advantages of a sole proprietorship My Idea My Business My Money My Decisions u Ease of start-up u Few regulations u sole receiver of profit u full control u easy to discontinue

Disadvantages of a sole proprietorship u Unlimited personal Liability u limited access to resources u Lack of Permanence

Partnership u Two or more owners that agree to work together and split profits.

Types of Partnerships General – every partner equally gets the same percentage of profits as they put into the business. Risk is spread evenly. Limited – (one member must be a general partner) the limited partner can only lose what they put into the business. Limited Liability Partnership (all partners limited i. e. a law firm)- no general partner, everyone is responsible for themselves.

Advantages of Partnerships ❖ Ease of start-up (must write an article of partnership) ❖ shared responsibility in decision making and specialization ❖ Larger pool of Capital

Disadvantages of Partnerships u unlimited liability u potential for conflicts u short lifespan

Corporations u Big corporations are normally owned by multiple owners called shareholders. u Shareholders own stock in the company.

Types of Stocks Common Stock: can vote for the board of directors; can get potential dividends Preferred Stock: Gets all first dividends but has no voting power. Therefore no voice in the running of the company.

Advantages of Corporations u 1. Limited Liability u 2. Separation of ownership and management (Increased specialization) u 3. transferable ownership u 4. Ease with which capital can be raised (Explain: bonds and stocks) u 5. Longevity

Disadvantages of Corporations u Expensive to start u More government regulations u Slow decision making process u Corporate and individual taxes u Potential loss of control by the founders