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this is a presentation on the legal forms of ownership, which discusses the characteristics, advantages and disadvantages of each form of ownership

this is a presentation on the legal forms of ownership, which discusses the characteristics, advantages and disadvantages of each form of ownership

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legal forms of ownership legal forms of ownership Presentation Transcript

  • Forms of Business Organizations grade 10
  • acknowledgements This presentation has been designed by N L Kekana with the use of some sources found in the last slide of this presentation.
  • My business or our business.????
  • Different
  • SoleTraders • The most common form of business organisation. • Owned and operated by one person • Very few legal requirements for setting it up.
  • Advantages • Easiest and least expensive form of ownership to organize. • Sole proprietors are in complete control, and within the parameters of the law, may make decisions as they see fit • Sole proprietors receive all income generated by the business to keep or reinvest. • Profits from the business flow directly to the owner's personal tax return. • The business is easy to dissolve, if desired.
  • disadvantages • Sole proprietors have unlimited liability and are legally responsible for all debts against the business. Their business and personal assets are at risk. • May be at a disadvantage in raising funds and are often limited to using funds from personal savings or consumer loans. • May have a hard time attracting high-caliber employees or those that are motivated by the opportunity to own a part of the business. • Some employee benefits such as owner's medical insurance premiums are not directly deductible from business income (only partially deductible as an adjustment to income).
  • Partnership What is partnership? Partnership is a type of business where 2 or more people agree to own, run and trade. Partnerships require a high degree of trust and are very common in fields such as medicine.
  • Partnership When setting up a business a person has to decide whether to set up a business on their own or with others. This will depend on: • how much control they want over the business • are they prepared to share the profit • can they raise necessary capital to start up the business by themselves
  • Partnership • There is also a risk factor. Is this person prepared to accept the risk of unlimited ability?
  • Partnership The advantages of partnership are: • easy to set up • solicitors and accountants are not required to run the business • profits belong to the partners • privacy. Only tax authorities need to be told how much partners are earning and profit of the business
  • Partnership • often good relations between partners • raising capital for the business is easier than that of sole proprietor • different expertise for partners e.g. 1 specialises in accountancy whilst the other in marketing Some businesses have sleeping/silent partners. They play a little role in running day to day basis of a business but they provide the capital for the business.
  • Partnership The disadvantages of partnership: • Disagreements between partners, which can be bad for business • some partnerships don’t have a deed of partnership, which can be bad for business • most partnerships are relatively small businesses e.g. Shops, farms
  • Partnership Definitions: • Ordinary Partnerships - there can be between 2 and 20 partners • Deed of Partnership - is the legal contract, which sets out following: • who the partners are • capital brought into business by each partner • how profits should be shared
  • Partnership • how many votes each partner has in any partnership meeting • what happens if there is a withdrawal of a partner from the business
  • What Is a Corporation? There are three types of corporations: •C-corporation •Subchapter S corporation •nonprofit corporation corporation a business that is registered by a state and operates apart from its owners; it issues shares of stock and lives on after the owners have sold their interest or passed away
  • In a corporation, the owners of the business are protected from liability for the actions of the company. The Main Idea
  • C-Corporation In smaller corporations, the founders generally are the major shareholders. shareholders the owners of a corporation
  • TWOTYPES OF CORPORATIONS 1. PRIVATE COMPANY • Closely held by a few people • Minimum 2 and maximum 50 shareholders
  • partnership • Stocks cannot be traded on exchanges and private equity cannot be raised • Less regulations as compared to Public Companies
  • 2. PUBLIC COMPANY •Stocks are held by a large number of people •Minimum 7 shareholders and no limit for maximum
  • Public company • Can be listed on stock exchange and can go public • Have to follow many laws with regards to the board composition and AGM.
  • List of references • JohnV. Padua,http://www.slideshare.net/johnpadua/forms-of- small-business-ownership • legal6 , http://www.slideshare.net/legal6/the-legal- forms-of-business-presentation-872138 • aureen-masuku , http://www.slideshare.net/aureen- masuku/business-forms-15102218