Intro to Business. Types of Ownership BEC 10

1. BUSINESS
FUNDAMENTALS
Types of Business Ownership

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. 4 TYPES OF OWNERSHIP
1. Sole Proprietorship
2. Partnership
3. Corporation
4. Co-operative

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. 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. 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. 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. 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. 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. 2. PARTNERSHIPS
DISADVANTAGES
 share profits
 partners could disagree
 friendships can be lost over time as a result

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. 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. 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. 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. 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. 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