Business Ownership Insights: Sole Proprietorship, Partnership, Corporation

1. Chapter 6 Business Ownership and operations

2. Sole Proprietorship • In USA 3/4 businesses have no employees • California led solo proprietorship, closely followed by fishing states Alaska and Maine • Income is taxed only once • Need a license or permit • Unlimited Liability or full responsibility for your company’s debts. You could lose your personal property Organizing a businessTypes of business ownership

3. Partnership- owned by two or more people who share the risks and rewards May need a permit or license Easier to obtain capital Partners bring different skills Income is taxed only once Draw up a partnership agreement that outlines the rights and responsibilities of each partner Organizing a businessTypes of business ownership

4. Corporation – owned by many people but treated by law as one person. Exits separate from its owners. Need corporate charter (a license to run a corporation) from your State Sell STOCK to raise money – for each share of common stock the stockholder gets a share of the profits and a vote Need a Board of Directors who control the corp. Major advantage is LIMITED LIABILITY. If the corporation loses money shareholders only lose the money they invested. Organizing a businessTypes of business ownership

6. Franchise – a contractual agreement to sell a company’s products or services in a geographic area. • Invest money • Pay an annual fee or share of profits • You get a well known name and business plan • It’s easy to start • Disadvantage the company is very strict how you run it Alternative ways to do business

7. Nonprofit Organization – type of business that focuses on providing a service rather than making a profit • Registers with the government just like a corporation and might be run by a Board of Directors • It doesn’t have to pay taxes • Rely on donations and grants instead of investors Alternative ways to do business

8. Cooperative – an organization owned and operated by its members for the purpose of saving money on the purchase of certain goods and services. • Its like a corporation sell stock and choose a Board of Directors to run it • Need government charter to start one • Individual owners pool their resources to buy insurance, supplies, advertising…. Alternative ways to do business

9. Producers – a business gathers raw products in their natural state….the raw materials ….agriculture, mining, fishing and forestry. • Processors – change raw materials into more finished products. • Wheat is turned into flour • Crude oil into gasoline Types of Businesses

10. Manufacturers – businesses that make finished products out of processed goods. • They turn raw or processed goods into finished goods that require no further processing and that are ready for the market • Bakeries make bread out of flour • Auto plant makes cars out of steel • Many of the leading businesses in USA are manufacturers: Pepsi, General Electric, • Procter&Gamble, Boeing…. Types of Businesses

11. Intermediaries -a business that moves goods from one business to another • It buys them, stores them and the resells them. • Wholesaler • Retailer Types of Businesses

12. Wholesaler –also known as a distributor who buys product is large quantities and then resells it in smaller quantities Retailer – buys product from wholesaler then sells them to the consumer or the final buyer. Intermediaries -

13. Service Businesses – • provide services rather than goods. • Services are the products of a skill or an activity • Some services meet needs (doctors) some conveniences (taxi, realtor, chef, hairdresser……) • Service Industry employees ¾ of the workforce Types of Businesses