CHAPTER 5 SLIDE 1 BUSINESS LAW BUSINESS OWNERSHIP

3 TYPES OF BUSINESS OWNERSHIP CHAPTER 5 ● Sole Proprietorship- 1 owner Example: Duncan’s Landscape (small business) ● Partnership- 2 or more owners Example: Law office of Smith & Williams ● Corporation- A legal entity where the owners are shareholders (stock ownership) Example: Apple, Wal-Mart © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e

CHAPTER 5 (3 types of ownership, advantages/ disadvantages/legal documents) Sole Proprietorship Advantage- 100% profit, easy to start Disadvantage- 100% liability & risk, long hours Legal Docs: Assumed Name Certificate, SS# or Tax ID Partnership Advantage- shared responsibility and risk Disadvantage- shared profits Legal Docs: Partnership Agreement, Tax ID Corporation. Advantage – limited liability, more resources Disadvantage- double taxation, limited profits Legal Docs: Corporate Resolution, Articles of Incorporation, Tax ID © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e

CHAPTER 5 3 TYPES OF BUSINESS OWNERSHIP Sole Proprietorship. Unlimited Liability- Owner is 100% responsible for the business Partnership Agreement- Legal Document that defines the details of each partner Corporation. Articles of Incorporation- Legal documents that defines the details of the corporation. Stock- shares of ownership in a corporation Limited Liability- The risk is limited to your investment. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e

CHAPTER 5 Forms of Ownership U. S. Business Comparison by Form of Ownership Proprietorship Number of Businesses (2006) Total Revenue (Thousands) Percent of All Businesses Percent of Total Revenue 22, 075, 000 1, 278, 000 71. 53% 4. 06% Corporation 5, 841, 000 26, 070, 000 18. 93% 82. 82% Partnership 2, 947, 000 4, 131, 000 9. 55% 13. 12% 30, 863, 000 31, 479, 000 100. 00% Total © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e

CHAPTER 5 Checkpoint ● Which form of business ownership is the most complex and difficult to form? ● The corporation is more complex to begin than other business forms. ● Forming a corporation requires much more bureaucracy, is more subject to government regulations, requires the organization of a board, and must have clearly defined bylaws. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e

CHAPTER 5 Checkpoint ● What are the other specialized forms of business ownership? ● Limited liability partnership ● Joint venture ● S corporation ● Limited liability company (LLC) ● Nonprofit corporation © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e

CHAPTER 5 ONLINE RESEARCH Research 3 Organizations (Governmental or Private) that protects consumers, workers, or for a certain cause. Many corporations are non-profit and are design to support a cause. © 2012 Cengage Learning. All Rights Reserved. Principles of Business, 8 e