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Chapter 37

Chapter 37. Business Organizations. What is Sole Proprietorship?. The simplest, most flexible, and easiest to start. ONE Owner. Advantages. Have control over all decisions Pay scale Hours Inventory or what to sell Keeps all profits. Disadvantages. All financial responsibility

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Chapter 37

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  1. Chapter 37 Business Organizations

  2. What is Sole Proprietorship? • The simplest, most flexible, and easiest to start. • ONE Owner

  3. Advantages • Have control over all decisions • Pay scale • Hours • Inventory or what to sell • Keeps all profits.

  4. Disadvantages • All financial responsibility • Personal property may be taken to pay for debt. • Not as much start up capital. • Limited experience and knowledge • Stress Level • Lots of Hours.

  5. Partnership • An association of TWO or MORE Persons. • Co-Owners

  6. Advantages • More start up capital • Share expenses and debt. • Combine labor, skill and knowledge

  7. Disadvantages • Share Profit • Lose some control over decisions • Personality Conflicts.

  8. How is a Partnership Ended? • Dissolution occurs when both parties agree to end. • Death • Court Decree or Order

  9. What is a Corporation? • A legal entity or artificial person in the eyes of the law. • Its existence it distinctly separate from real people who organize, own and run it. • Created by and for the people.

  10. Advantages • Perpetual Life • Limited Liability • Transferability of Ownership Interests • Ability to attract large sums of capital • Professional management

  11. Disadvantages • Taxes – 2 times. The corporation gets taxed on its income, and individuals get taxed when they receive their checks. • Hard to start and manage. • Legal issues to face. • Cost lots of money to get started.

  12. S Corporation • Organized under Subchapter S of the Internal Revenue Code. • Only has 1 class of stock----Common • No more than 35 Shareholders. • Taxes-Treated as a Partnership.

  13. What is a Stock? • Share of ownership in a company.

  14. Common Stock • Paid Second after Preferred • Dividends depend on Income of Corporation. • Vary from quarter to quarter. • Voting power. One vote per share of stock.

  15. Preferred Stock • Paid first • Guaranteed a certain amount of money-if the corporation has money to give. • No Voting Power

  16. Shareholder • The person who owns the stock. • Also called a Stockholder

  17. Franchise • Corporation owned business that sells permission to own operate on their behalf.

  18. Advantages of a Franchise • Success rate is very high. • Very little risk • Consumer recognition • Production Identification already established. • Marketing decisions already done for you. • Professional Management to assist you.

  19. Disadvantages of a Franchise • Limited control over decisions • Marketing, advertising, product choices are done for you. • A franchise fee –large amount.

  20. Legal Involvement of Government in Business • See Transparency

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