Types of Business Ownership

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Intro to Business. Types of Ownership BEC 10

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Types of Business Ownership

  1. 1. BUSINESS FUNDAMENTALS Types of Business Ownership
  2. 2. TYPES OF BUSINESS OWNERSHIP Who is your boss? Who is your boss’s boss? Can you become part owner? Forms of business ownership and type of business help describe how the business is organized and run.
  3. 3. 4 TYPES OF OWNERSHIP 1. Sole Proprietorship 2. Partnership 3. Corporation 4. Co-operative
  4. 4. 1. SOLE PROPRIETORSHIP  Owned by one person, who performs most roles and owns everything  Owner gets all profits, takes all the losses → called unlimited liability  Easiest and least expensive to set up  Easiest for tax purposes → income recorded under personal income
  5. 5. 1. SOLE PROPRIETORSHIP ADVANTAGES  owner makes all the decisions- hours of business, whom to hire  they are their own boss  any profits belong to the owner
  6. 6. 1. SOLE PROPRIETORSHIP DISADVANTAGES  the owner may lack the ability to buy the right supplies, do accounting etc  it the business loses money, so does the owner  creditors can claim the personal belongings of the owner  long hours  if the owner is ill the business doesn’t open
  7. 7. 2. PARTNERSHIPS Two or more individuals share costs and responsibilities Terms of partnership recorded in partnership agreement  “silent” partners- partners that usually will front a lot of capital, but do not want to participate in business decisions – receive profits in return
  8. 8. 2. PARTNERSHIPS  Two types of Partnerships can exist in a business:  General partnership  All partners have unlimited liability (can be held responsible for the other partner’s business related debts)  Limited partnership  Partners have limited liability (only responsible for their share)
  9. 9. 2. PARTNERSHIPS ADVANTAGES  two or more people share decision making process  one person may be better at one task than the other partner  sometimes easier to borrow money if two people are involved
  10. 10. 2. PARTNERSHIPS DISADVANTAGES  share profits  partners could disagree  friendships can be lost over time as a result
  11. 11. 3. CORPORATION  Business with a legal status  Can be as small as one person, or multinational  Some owned by individuals, families, small groups
  12. 12. 3. CORPORATION  Ownership often broken into small units, shares, which are sold through a stock exchange (ie. TSX) → a publicly traded corporation  Those who buy: shareholders
  13. 13. 3. CORPORATIONS  Since there are many owners, a board of directors runs corp.  Shareholders have limited liability, not responsible for debts  Get profits as dividends
  14. 14. 3. CORPORATION  TYPES 1. Private Corporation  Only a few people control stock  Not publicly traded 2. Public Corporation  Sell shares to raise money  1 share = 1 vote;  3. those with most shares influence company decisions (usually orig. owner, execs) Crown Corporation  Business owned by the federal or provincial government  Federal: VIA Rail, Canada Post, Bank of Canada  Provincial: BC Transit, BC Lottery, BC Hydro, BC Museum
  15. 15. 4. COOPERATIVES  Business owned by workers/those who use it  Run by board of directors  Each member only gets 1 vote  Profits shared based on use Examples:  Peninsula Co-op, Mountain Equipment Coop (MEC)
  16. 16. FRANCHISE  A franchisor licenses the rights to the business to a franchisee for a fee  Franchisee runs business according to agreement  Franchisee also pays monthly fee, has to purchase product through franchiser, sometimes gets trained by franchiser, has to maintain uniform quality etc.  Examples: Tim Hortons, McDonalds, M&M Meats, Boston Pizza, UPS Store

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