Chapter 6 Types of Business Ownership The three
Chapter 6 Types of Business Ownership The three different ways you can own a business are: • Sole proprietorship • Partnership • Incorporation Introduction to Business, Business Ownership and Operations Slide 1 of 69
Chapter 6 Sole Proprietorship A sole proprietorship is a business owned by only one person. Introduction to Business, Business Ownership and Operations Slide 2 of 69
Chapter 6 Sole Proprietorship The advantages to having your own business are: • It’s easy to start • You get to be your own boss • You get to keep all the profits • The taxes are usually low Introduction to Business, Business Ownership and Operations Slide 3 of 69
Chapter 6 Sole Proprietorship The disadvantages to having your own business are: • You have to pay for everything yourself • You might have to use your personal savings or • borrow money from the bank You might lack business skills continued Introduction to Business, Business Ownership and Operations Slide 4 of 69
Chapter 6 Sole Proprietorship A serious disadvantage to owning a sole proprietorship is that you have unlimited liability, or full responsibility for your company’s debts. Introduction to Business, Business Ownership and Operations Slide 5 of 69
Chapter 6 Partnership A partnership is a business owned by two or more persons who share the risks and rewards. Introduction to Business, Business Ownership and Operations Slide 6 of 69
Chapter 6 Partnership • Banks are often more willing to lend • money to partnerships than sole proprietorships. Your partners can bring different skills to the business. Introduction to Business, Business Ownership and Operations Slide 7 of 69
Chapter 6 Partnership The disadvantages to partnership are: • You not only share the risks with your partners, you • • also share the profits. You might not get along with your partners. You share unlimited legal and financial liability with your partners continued Introduction to Business, Business Ownership and Operations Slide 8 of 69
6 Similarities and Differences Between Graphic Organizer Chapter Partnerships and Sole Proprietorships Both Partnerships Sole Proprietorships Quicker decision Pride in making owning and running business Owner keeps Increased Easy to set up all profits diversity of Low taxes experience Owner is Unlimited liability own boss for debts Shared losses Relatively easy Huge time Combined demands to get credit funds Shared decision making Introduction to Business, Business Ownership and Operations Slide 9 of 69
Chapter 6 Corporation A corporation is a business owned by many people but treated by law as one person. Introduction to Business, Business Ownership and Operations Slide 10 of 69
Chapter 6 Corporation To raise money, you can sell stock, or shares of ownership in your corporation. Introduction to Business, Business Ownership and Operations Slide 11 of 69
Chapter 6 Corporation For each share of common stock, the stockholder gets a share of the profits and a vote on how the business is run. You also must have a board of directors who control the corporation. Introduction to Business, Business Ownership and Operations Slide 12 of 69
Chapter 6 Corporation A major advantage of a corporation is its limited liability. If your company loses money, the stockholders lose only what they invested. Introduction to Business, Business Ownership and Operations Slide 13 of 69
Chapter 6 Corporation Another advantage is that the corporation doesn’t end if the owners sell their shares. Introduction to Business, Business Ownership and Operations Slide 14 of 69
Chapter 6 Corporation A disadvantage of a corporation is that you often have to pay more taxes. Introduction to Business, Business Ownership and Operations Slide 15 of 69
Chapter 6 Alternative Ways to Do Business Franchises, and nonprofit organizations offer you other ways to do business. Introduction to Business, Business Ownership and Operations Slide 16 of 69
Chapter 6 Franchise A franchise is a contractual agreement to sell a company’s products or services in a designated geographic area. Introduction to Business, Business Ownership and Operations Slide 17 of 69
Chapter 6 Franchise To run a franchise you have to invest money and pay the franchisor an annual fee or a share of the profits. In return, the franchisor offers a wellknown name and a business plan. Introduction to Business, Business Ownership and Operations Slide 18 of 69
Chapter 6 Franchise You can operate a franchise yourself, as a sole proprietor, as a partnership with someone else, or even as a corporation. Introduction to Business, Business Ownership and Operations Slide 19 of 69
Chapter 6 Franchise An advantage of opening a franchise is that it’s easy to start. The name of the parent company can be a big draw for customers. Introduction to Business, Business Ownership and Operations Slide 20 of 69
Chapter 6 Franchise The disadvantage of running a franchise is that the franchisor is often very strict about how the business is run. Introduction to Business, Business Ownership and Operations Slide 21 of 69
Chapter 6 Nonprofit Organization A nonprofit organization is a type of business that focuses on providing a service rather than making a profit. Introduction to Business, Business Ownership and Operations Slide 22 of 69
Chapter 6 Nonprofit Organization Like a corporation, a nonprofit organization has to register with the government and might be run by a board of directors. Introduction to Business, Business Ownership and Operations Slide 23 of 69
Chapter 6 Nonprofit Organization Because it doesn’t make a profit, a nonprofit organization doesn’t have to pay taxes. Introduction to Business, Business Ownership and Operations Slide 24 of 69
Chapter 6 Nonprofit Organization Donors don’t receive dividends like investors, but they can deduct their donations from their taxes. Introduction to Business, Business Ownership and Operations Slide 25 of 69
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