Lessons Chapter 31 CHAPTER 31 Forms of Business Organization 31-1 Basic Attributes of Business Organizations 31-2 Creating and Terminating Partnerships 31-3 Operating Partnerships
GOALS Chapter 31 LESSON 31-1 Basic Attributes of Business Organizations Discuss the basic attributes of the sole proprietorship, partnership, and corporation Determine which one form of organization may be best in a particular situation Explain the risks of utilizing each form of business organization
Chapter 31 WHAT IS A SOLE PROPRIETORSHIP? A sole proprietorship is a form of business owned by one person who has total unlimited liability.
Chapter 31 WHAT IS A PARTNERSHIP? A partnership is an association of two or more persons to carry on as co-owners of a business for profit.
Chapter 31 WHAT IS A CORPORATION? A corporation is a legal entity created by the authority of federal or state law.
GOALS Chapter 31 LESSON 31-2 Creating and Terminating Partnerships Explain how a partnership is formed Identify different types of partnerships and partners Discuss the ways in which a partnership can be terminated and what happens when this occurs
Chapter 31 HOW IS A PARTNERSHIP CREATED? • Kinds of partnerships and partners • Classification by purpose • Classification by extent of liability • Classification of partners
Chapter 31 ENDING A PARTNERSHIP • Action of one or more of the partners • Operation of law • Court decree
GOALS Chapter 31 LESSON 31-3 Operating Partnerships Discuss a partner’s rights and duties Determine when a partner has authority to act Discuss a partner’s potential liability
Chapter 31 PARTNERS’ DUTIES • Comply with partnership agreement and decisions • Use reasonable care • Act with integrity and good faith • Not conduct competing business • Keep accurate records
Chapter 31 PARTNERS’ RIGHTS • Right to participate in management • Right to profits • Right in partnership property • Right to extra compensation
Chapter 31 PARTNERS’ AUTHORITY • Make binding contracts for the firm • Receive money owed to and settle claims against the firm • Borrow money in the firm’s name • Buy and sell • Draw and cash checks and drafts • Hire and fire employees and agents • Receive notice of matters affecting the partnership • A partner’s creditor’s rights
Chapter 31 PARTNERS’ LIABILITIES • Criminal liability • Civil liability