1 / 17

Understanding Business Ownership Types: Pros and Cons of Sole Proprietorships, Partnerships, Corporations

Explore the various forms of business ownership including Sole Proprietorships, Partnerships, Corporations, and more. Learn about their advantages, disadvantages, and key considerations when choosing a business structure. This resource provides insights on owner liability, ease of formation, capital raising, taxes, and control over operations. Understand how different ownership models impact business life, and discover examples of famous entities within each category. Whether you're starting a new venture or studying business structures, this overview is invaluable.

yaphet
Download Presentation

Understanding Business Ownership Types: Pros and Cons of Sole Proprietorships, Partnerships, Corporations

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  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?

More Related