Types of Business. Ch. 22, Section 1. 4 Elements of Business. Expenses What you need to start & continue a business Advertising Introduction and reminder of your business Receipts & Record Keeping Needs to be accurate and dependable – for profits & losses Risk (profit vs. loss)
Ch. 22, Section 1
Use of computers/Technology
Time – the opportunity cost. You could be working for someone else.Considerations When Starting a Business
Receive all profits
Quick decisions because no consultation
Relatively low taxes
Handle all decisions
Rely on own funds
Business depends on one personSole Proprietorship
Losses are shared
More efficient than proprietorships
Pay taxes on share of profit
Easier to borrow money
Profits are shared
Unlimited liability, most of the time
Must reach agreements
Owners do not have to devote time to make money.
Stockholders have limited liability; they only lose what they put in.
Individuals trained in specific areas make decisions.
Decisions are slow. Interest of the board may differ from the stockholders.
Double taxation. Govt. taxes corporate profit than individual shares.
Stockholders have little or no say in how business is run.Corporations
Stock: Individual ownership in a corporation. Shareholder receives voting rights and dividends.
Bond: Promise by a corporation to pay a stated amount of interest over a period of time.Stocks and Bonds