What we are studying next…

1. What we are studying next… Send your guess in!

2. Basic Ownership Forms Mr. Hudnall

3. Business Organizations • 3 main types • Sole Proprietorship • Partnership • Corporation • Considerations for choosing the best type • Owner’s liability for firm’s debts • The ease and cost of forming the business • The ability to raise funds • The taxes • The degree of operating control the operator can retain • The ability to attract employees

4. Sole Proprietorship Created, Owned, Operated, and usually financed by one person. Advantages Disadvantages • Easy & inexpensive to form • Profits go to owner • Direct control • Fewer regulations • No special taxes • Ease of dissolution • Unlimited liability • Difficult to get capital • Limited management experience • Trouble getting employees • Time commitment • Unstable business life • Losses owner’s responsibility

5. Famous Sole Proprietorships?

6. Partnerships • Types of partnerships • General Partnerships • Partners share responsibilities, profits, etc • Unlimited liability • Limited Partnerships • General partners have unlimited liability and are responsible for its operations. • Limited partners have limited liability and do not participate in the company’s operations.

7. Partnerships Advantages Disadvantages • Ease of formation • Availability of capital • Diversity of skills & expertise • Flexibility to respond to changing business conditions, Relative freedom from government control • No special taxes • Unlimited liability for general partners • Potential for conflict between partners • Limited life • Sharing of profits • Difficulty in leaving a partnership

8. Famous Partnerships?

9. Corporations • Legal entities with a separate existence from its owners. • Types of Corporations • C – corporations • conventional • S – corporations • Taxed like a partnership

10. Corporations Advantages Disadvantages • Limited liability • Easy to get financing • Easy to transfer ownership • Unlimited life-span • Tax deductions • Double taxation of profits • Costly & complex to form • Government restrictions

11. What are some famous corporations? ?

12. LLC Advantages Disadvantages • Protection of personal assets • Avoid double-taxation of profits • Flexible management & organization • Good for foreign investors • Often required to have a limited life (< 30 years) • Not corporations, so can not issue stock

13. Largest LLCs? $98 billion in 2007 $88.3 billion $74.8 billion – self supporting federal agency $49 billion $25 billion $13.6 billion

14. Cooperatives • Formed by people with similar interests • Goals: to reduce costs and gain economic power • Profits go to member-owners in proportion to contributions • Have corporate features (limited liability, unlimited life, Board of Dir.) • Types of Cooperatives • Seller Cooperatives • Buyer Cooperatives

15. Franchises • Individually owned companies that operate like they are part of chain of companies • Franchisor supplies management training, operating assistance, brand name, product, financial assistance, etc • Franchisee pays a fee for the franchise and sells the goods or services of the franchisor • Allows an individual to own a business without starting from nothing – buys a proven product and operating methods

16. Franchises Advantages Disadvantages • Increased opportunity to expand (franchisor) • Recognized name, product, and operating concept (franchisee) • Management training and assistance (franchisee) • Financial assistance (franchisee) • Loss of control (franchisor) • Costs of franchising • Restricted operating freedom (franchisee)

17. Most Popular Franchises?