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Lesson 5 2

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Forms of Business Ownership
(Intro to Business, 6e)

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Lesson 5 2

  1. 1. Lesson 5-2 Forms of Business Ownership
  2. 2. Proprietorship <ul><li>Business owned and run by one person </li></ul><ul><li>Easiest to start </li></ul><ul><li>Few legal requirements </li></ul><ul><li>More control over business decisions </li></ul><ul><li>Owner receives all profits </li></ul><ul><li>Owner is responsible for losses </li></ul><ul><li>No shelter from creditors (personal assets may be used to pay debt of business) </li></ul>
  3. 3. Partnership <ul><li>Business owned by two or more individuals </li></ul><ul><li>Written agreement </li></ul><ul><li>Easy to start </li></ul><ul><li>All partners are responsible for running business </li></ul><ul><li>All partners share in profits/losses </li></ul><ul><li>Partners responsible for decisions of each other </li></ul>
  4. 4. Corporation <ul><li>Separate legal entity (the business is treated as an individual) </li></ul><ul><li>Documents must be filed with state </li></ul><ul><li>Owned by shareholders (stockholders) </li></ul><ul><li>Managed by a board of directors </li></ul><ul><li>Difficult to begin </li></ul><ul><li>More legal requirements </li></ul><ul><li>Risk of stockholders limited to their investment in stock </li></ul>
  5. 7. Articles of Partnership <ul><li>Written agreement among all owners. </li></ul><ul><li>Details rules and procedures </li></ul><ul><li>Identifies </li></ul><ul><ul><li>Business name </li></ul></ul><ul><ul><li>Investment of each member </li></ul></ul><ul><ul><li>Contributions of each member </li></ul></ul><ul><ul><li>Responsibilities of each member </li></ul></ul>
  6. 8. Articles of Incorporation <ul><li>Written legal document that defines ownership and operating procedures and conditions of business </li></ul><ul><li>Must fill out state forms and be granted permission </li></ul><ul><li>Must have corporate bylaws </li></ul><ul><li>Must have board of directors </li></ul><ul><li>Issues shares of stock (private or public) </li></ul>
  7. 9. Other Forms of Ownership <ul><li>Limited liability partnership </li></ul><ul><li>Joint venture </li></ul><ul><li>S-corporation </li></ul><ul><li>Limited liability company </li></ul><ul><li>Nonprofit corporation </li></ul>
  8. 10. Franchises <ul><li>Franchise is a written contract granting permission to operate a business to sell products and services in a set way </li></ul><ul><ul><li>Franchiser – company that owns the products or service and grants the rights </li></ul></ul><ul><ul><ul><li>Assists with operations </li></ul></ul></ul><ul><ul><ul><li>Provides national advertising </li></ul></ul></ul><ul><ul><li>Franchisee – company purchasing the rights to run the business </li></ul></ul><ul><ul><ul><li>Maintains day-to-day operations </li></ul></ul></ul><ul><ul><ul><li>Pays a fee & percentages of profits to the franchiser </li></ul></ul></ul>
  9. 11. Cooperatives <ul><li>Business owned by members </li></ul><ul><li>Serves needs of members </li></ul><ul><li>Managed in the interest of members </li></ul><ul><li>Examples: Electric cooperatives, consumer cooperatives </li></ul>
  10. 12. The End

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