Warmup • Do you know anyone who owns their own business? Describe what they do.
Unit IIIBusiness and Labor Part I – Types of Business
Advantages Owner makes all decisions Keep all the profits No corporate income tax Easiest to set up Disadvantages Not an expert in all areas Responsible for all mistakes Unlimited Liability responsible for all debts, personal property can be taken Hard to raise capital (money) Sole Proprietorship single owner – most common form of business in US
Advantages Can raise more capital Share in responsibility No corporate income tax Disadvantages Unlimited Liability responsible for all debts, personal property can be taken Share decision making Share profits More complicated to set up than sole proprietorship Partnership Two or more owners
Advantages Can raise a lot more capital ($) through sale of stocks and bonds Decisions are made by professionals Limited Liabilityonly responsible for how much you have invested Earns the most money in US Disadvantages Have little say in how the company is run Only share in portion of profit Most complicated to set up Corporate Income Tax CorporationCompany is owned by people who buy its’ stock
Types Sole Proprietorships = 72% Corporations = 20% Partnerships = 8% Earnings Corporations = 83% Partnerships = 12% Sole Proprietorships = 5% Business Types and Profits
Charter: government permission to organize a corporation Stock: shares in the company sold to the public How are corporations established?
Who owns a corporation? • Stockholders
How are corporations run? Owners = Stockholders who elect the Board of Directors who select the President who hires VP of Sales VP of Production VP of Finance
Examples Cooperatives Nonprofit organization of people set up to carry out an economic activity Non-Profit Organizations Businesses that are not out for profit
Warmup • How did Andrew Carnegie respond when workers at his steel mill went on strike?