Understanding types of businesses
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UNDERSTANDING TYPES OF BUSINESSES. What types of Businesses/Ag. Businesses do we have in Sleepy Eye? What are the major differences between these businesses?. What are the major types of businesses?. Individually Owned (Sole Proprietorship) Partnership Corporation Cooperative

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UNDERSTANDING TYPES OF BUSINESSES

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Understanding types of businesses

UNDERSTANDING TYPES OF BUSINESSES


Understanding types of businesses

  • What types of Businesses/Ag. Businesses do we have in Sleepy Eye?

  • What are the major differences between these businesses?


What are the major types of businesses

What are the major types of businesses?

  • Individually Owned (Sole Proprietorship)

  • Partnership

  • Corporation

  • Cooperative

  • LLC (Limited Liability Company)


Individually owned sole proprietorship

Individually Owned (Sole Proprietorship)

  • A business enterprise where the individual owns, operates, manages, and receives the earnings of the business.

    (The oldest and most common method of doing business.)

S 1.2


Partnership

Partnership

  • A business enterprise owned and controlled by two or more people who have agreed to operate on a partnership basis.

    (Family partnerships are common in farming.)

S 1.3


Corporation investor oriented

Corporation: Investor-Oriented

  • A state-chartered business that has the right to buy and sell goods and services.

  • The most common form of business organization, and given many legal rights as an entity separate from its owners.

S 1.4


Cooperative

Cooperative

  • A user-owned and user controlled (State-chartered) business in which benefits are received in proportion to use.

    (Commonly used in agriculture to buy, sell, and service individual farm businesses.)

S 1.5


Hybrid limited liability company

Hybrid: Limited Liability Company

  • A business structure that combines characteristics of both a partnership and a corporation. It combines the single-tax treatment of a partnership with the limited personal liability of a corporation. As in a cooperative, LLC owners are called members.

    (Becoming increasingly common in agricultural business today.)

S 1.6


Comparison of methods of doing business

Comparison of Methods of Doing Business

Hybrid

Limited Liability

Features

Individual-Owned

Partnership

Corporation

Cooperative

Who uses the Nonowner Generally GenerallyGenerally the Generally

services? customers nonownernonowner members nonowner

customers customerscustomers

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Who owns the individual partners stockholders members members

business?

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Who votes? Not applicable The partners Common stockholders The members The members

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How is voting Not applicable Usually by By shares of One-member, Usually by

conducted? Partners’ share common stock one-vote or members’

in capital proportional share in capital

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S 1.7


Free enterprise systems

Free Enterprise Systems

Two major differences: ownership and profit incentive

Ownership

Profit incentive

Individually owned The individual Profit for the individual owner

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Partnerships Two or more individuals Profit for the two or more partners

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Investor-oriented The stockholders Profit (dividends) for stockholders

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Cooperative corporations The members Profit for members (higher income)

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Limited-liability corporation The member investors Profit for member investors

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Public business The public Least cost to taxpayers

S 1.8


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