THE ROLE OF BUSINESS Sole Proprietorship Partnership and
THE ROLE OF BUSINESS Sole Proprietorship, Partnership and Corporations
Starting a Business � Entrepreneur: Willing to take a risk to start a business � Gather the factors of production � Must learn as much as possible about the business � Laws, regulations and tax codes
Elements of Business Operation � Expenses � Purchasing � Advertising � Customers � and vendors know your business Receipts and Record Keeping � Tracking � of materials and capital of expenses and income Risk � Risk and reward is considered the most essential part
What is Profit? � Income – All Expenses = Profits � Expenses: � Wages, Taxes, Parts, Utilities, etc.
Sole Proprietorship � � Business owned and run by one individual Proprietor = Owner Oldest form and most common business Advantages: � Ease of Operation � Potential Profits � – “You’re the Boss” Disadvantages: � Limited Life � Limited Funds � Limited Abilities � Unlimited Liabilities (legally responsible)
Partnership � � Business owned by two or more persons Limited: partners not sharing equal responsibility General: full duties and responsibilities Advantages: � More Money (Capital) Available � “Two heads are better than one” � Disadvantages: � Unlimited Liability � Limited Life � Limited Funds � Partners May Disagree
Corporation � � � Business licensed (charter) by state or federal government as a legal individual Stockholders (shares) are true owners of corporation Advantages: � Limited Liability � Unlimited Life � Easy Transfer of Ownership � Disadvantages: � Costly and Complicated to set up � Double Taxation Corporate and Personal Income Tax
- Slides: 7