FORMS OF BUSINESS ORGANIZATION By Jacob Rogero Sammy

FORMS OF BUSINESS ORGANIZATION By: Jacob Rogero, Sammy Geitz, and Richard Vera

Sole Proprietorship

Sole Proprietorship Advantages of sole proprietorships Economic Weakness of sole proprietorship: � Unlimited Liability: you have total � Ease of start up � Ease of Management � You keep all profits � Difficulty in raising financial capital � You do not have to pay any business � Limited size and efficiency � Limited managerial experience � Limited Life taxes � Psychological advantages � Ease of exit responsibility for all debts and liabilities of the company

Stop and Think � If you started your own business what would it be?

Partnership

Partnerships Two major types of partnerships: � General Partnership: (most common type) all partners are responsible for management and the financial responsibilities of the partnership. � Limited Partnership: at least one partner is not active in the day to day running of the business. They have limited liability. Articles of Partnership: contract between partners spelling out the rules of partnership. Dividing profit Dividing responsibility Admitting new partners Buying out partners

Partnerships Advantages of Partnerships: � � Ease of establishment Ease of Management: each partner has different things to offer Disadvantages of Partnerships � Unlimited liability � Limited partner is only � No special business taxes responsible for his initial � Easier to raise financial capital investment. He has limited � Larger than sole proprietorship liability. � Easier to attract qualified workers � Limited Life � Conflict between partners

Examples of Corporations

Corporation- Set up Incorporate: to form a corporation. � Charter: a document granted by the state giving a corporation the right to do business � Stock: shares of ownership in the corporation � Stockholders (shareholders): owners of stock. � Reasons to own stock: Dividends: share of corporate profits paid to stockholders Speculation: buy in hope that price of stock will increase.

Corporation- Ownership � � � Common Stock is a basic share of ownership in a corporation Have voting rights in the management of the company In reality they turn over voting rights to someone else with a proxy: giving someone else the right to vote your share of stock. Preferred Stock: -Non voting shares of ownership -Guaranteed dividend -Liquidation benefit: If corporation goes out of business they are ahead of common stockholders in getting back money. � Board of Directors: duty to direct the corporations business by setting board policies and goals � Elected by common stockholders � Hires a professional management team to run day to day activities. (CEO, CFO…. )

Corporations Advantages of a corporation: � � � Ease of raising financial capital (main advantage) � Selling stock to investors � Selling bonds: a written promise to repay a loan on a specific date � Principal: the amount borrowed � Interest: the price paid for the use of another’s money � Borrowing money from banks. Ability to hire Limited liability Unlimited life Ease of transferring ownership: . Buying and selling stock is easy and is done millions of times a day � Disadvantages of a corporation: � Start up expenses are high. � Stockholders (owners) have a limited � � Profits are taxed Corporations are subject to more government regulations than sole proprietors or partners

Compare � Using the Venn diagram, list the similarities and differences between Sole Proprietorships, Partnerships, and Corporations

Mergers and Acquisitions � 5 Reasons to merge- Make money faster, Increase efficiency, Acquire new product lines, Catch up or eliminate rivals, Lose a company identity. � Horizontal Merger- when two or more companies that product the same kind of product join forces. � Vertical merger- when two or more firms that are at different steps of manufacturing process join together. � Conglomerates- is a firm that has at least four businesses, each making unrelated products.

� With a neighbor, develop 2 examples of each type of merger�Vertical �Horizontal �Conglomerate

Non Profit Organization � � � A nonprofit organization (NPO, also known as a nonbusiness entity) is an organization that uses its surplus revenues to further achieve its purpose or mission, rather than distributing its surplus income to the organization's shareholders (or equivalents) as profit or dividends. Some non profit organizations are Museum of Modern Art American Museum of Natural History American Red Cross Alzheimer's Association

Examples Of Non Profits

Case Study - Hooters � � � Hooters is one of Florida's largest corporations. It was founded by 6 men that wanted to create a restaurant that they couldn’t get kicked out of. The “Hooters Six” are L. D. Stewart, Gil Di. Giannantonio, Billy Ranieri, Ed Droste, Dennis Johnson, and Ken Wimmer. The first Hooters was opened on October 6 th, 1983 in Clearwater, Florida. Hooters went public in 1984 and expanded its stores outside of Georgia and Florida.

Hooters (cont. ) � � This is a picture of the original “Hooters’ Girls. ” The trademark running shorts look was used because the first secretary used to wear them around the office.

Summary � � � Today, we learned so much about the different types of business organizations. We learned about sole proprietorships, partnerships, and corporations. We also learned how Non-Profits work and how they help our community.

Sources � � http: //www. kcsourcelink. com/learning-center/starting-abusiness/register-and-license-your-business/forms-ofbusiness-organization http: //www. investopedia. com/walkthrough/corporatefinance/1/forms-business-organizations. aspx http: //highered. mheducation. com/sites/007353062 x/stu dent_view 0/ebook/chapter 1/chbody 1/1_2_forms_of_bu siness_organization. html http: //www. myownbusiness. org/s 4/