TYPES OF BUSINESS OWNERSHIP CHAPTER 6.1 Introduction to Business and Marketing.
-
Upload
eustacia-mills -
Category
Documents
-
view
235 -
download
2
Transcript of TYPES OF BUSINESS OWNERSHIP CHAPTER 6.1 Introduction to Business and Marketing.
TYPES OF BUSINESS OWNERSHIPCHAPTER 6.1
Introduction to Business and Marketing
THE MAIN IDEA
Sole proprietorships, partnerships, and
corporations are the most common
forms of business organization.
Cooperatives, nonprofits, and
franchises are other forms.
ORGANIZING A BUSINESS The three main types of business
organizations are:
SoleProprietorships
Partnerships Corporations
TYPES OF BUSINESS OWNERSHIP
FIGURE 6.1
U.S. Sole Proprietorships, Partnerships, and Corporations
Total Number of Businesses(72%) Sole Pro-
prietorship(20%) Corporations(5%) Partnerships(3%) Other
Amount of Revenue Generated by Each Kind
of Business(5%) Sole Proprietorship(85%) Corpora-tion(8%) PartnershipOther
SOLE PROPRIETORSHIP
About 3/4 of all businesses in the United States are sole proprietorships.
sole proprietorshipa business owned by one person
SOLE PROPRIETORSHIP
Easy to start Owner keeps all
the profit Owner has total
control Taxes are lower
than a corporation
Unlimited liability Limited access to
credit Owner may not
have the necessary skills
Many run out of money
Business dissolves when owner dies
Advantages Disadvantages
PARTNERSHIP
To start a partnership you must have a partnership agreement
partnershipa business owned by two or more people who share its risks and rewards
PARTNERSHIP
Easy to start Easier to get capital Easier to obtain
credit Not dependent on
one person Only taxed once Diversity of skills
Business risk is shared among all partners
Unlimited legal and financial liability is shared
If one member makes a mistake all are responsible
Advantages Disadvantages
CORPORATIONS
To form a corporation, the owners must get a corporate charter from the state where their main office will be locatedcorporation
a company that is registered by a state and operates apart from its owners
CORPORATIONS
One of the major advantages of a corporation is limited liabilitylimited liability
holds a firm’s owners responsible for no more than the capital that they have invested in it
CORPORATION
Limited Liability Ability to raise
money by selling stock
Business does not end when an owner dies
Double taxation Income Stock holder
dividends
More government regulation
Difficult and costly to start
Advantages Disadvantages
OTHER WAYS TO ORGANIZE A BUSINESS
Other ways to organize a business include:
CooperativeNonprofit
OrganizationFranchise
COOPERATIVE
The purpose of a cooperative is to save money on the purchase of certain goods and servicescooperativean organization that is owned and operated by its members
NONPROFIT ORGANIZATION A nonprofit
organization does not pay taxes because it does not make a profit
nonprofit organizationa type of business that focuses on providing a service, not making a profit
FRANCHISE
The run a franchise, you have to invest money and pay franchise fees or a share of the profitsfranchisea contractual agreement to use the name and sell the products or services of a company in a designated geographic area