This document discusses three main types of business ownership: sole proprietorships, partnerships, and corporations. It provides details on the characteristics, advantages, and disadvantages of each. Sole proprietorships are owned by one individual and are the easiest to start but provide unlimited liability. Partnerships involve two or more owners who share profits and responsibilities. Corporations are legally separate entities that can sell stock and provide limited liability to owners. The document also briefly discusses other forms of business like non-profits, LLCs, franchises, and buying an existing business.

1. Typesof BusinessOwnership
(Thelogos usedin this PowerPoint were copieddirectlyfromcorporatewebsites. They
havenot beenalteredinanyway.)

2. ThreeBasicTypes
of BusinessOwnership
1.Soleproprietorship
2. Partnership
3. Corporation

3. What isaSoleProprietorship?
•Abusinessownedandoperatedby
one person.
•Theeasiest andmost popular type
of businessownership.
•Approximately76percent
of all businessesinthe
U.S. aresole
proprietorships.

4. Advantagesof SoleProprietorships
•Easyandinexpensivetocreate.
•Owner makesall businessdecisionsand
activities.
•Owner receivesall profits.
•Least regulatedtypeof business
ownership.
•Businessitself paysnotaxes.

5. Disadvantagesof SoleProprietorships
•Ownerhasunlimitedliability forall debtsand
actionsof thebusiness.
Unlimitedliabilitymeansthe
debtsof thebusinessmaybepaidfromthe
personal assetsof theowner.
•Difficult toraisecapital.
•Soleproprietorshipislimited byhis/herskills

6. What isaPartnership?
Atypeof business
ownershipinwhichtwo
or morepeopleshare
theassets, liabilities,
andprofits.

7. Typesof Partnerships
•General partnership: Apartnershipinwhichall
partnershaveunlimitedpersonalliability andtakefull
responsibilityfor themanagement of thebusiness.
•Limitedpartnership: Apartnershipinwhichthe
partners’ liabilityislimitedtotheir investment.
•Joint venture: Apartnershipinwhichtwocompanies
jointocompleteaspecificproject. Thepartnershipends
after aspecifiedperiodof time.
•Strategicalliance: Apartnershipinwhichtwo
businessesworktogether for mutual benefit. (Example: A
businesstypesapartnershipwithamanufacturer that agreesto
producethebusiness’s products.)

8. Advantagesof Partnerships
•Shareddecisionmakingandmanagement
responsibilities.
•Easier toraisecapital thaninasole
proprietorship.
•Fewgovernment regulations.
•Businesslossesare
shared byall partners.

9. Disadvantagesof Partnerships
•Partnershipsmayleadto disagreements.
•Someentrepreneursarenotwilling toshare
responsibilities and
profits.
•Someentrepreneursfear beingheld legally

10. What isaCorporation?
Abusinessthat ischarteredbya
stateandlegallyoperatesapart
fromitsowners.

11. Typesof Corporations
• C-corporation: Themost commontypeof
corporation. It protectstheentrepreneur frombeing
personallysuedfor theactionsanddebtsof the
corporation.
• Subchapter S-corporation: Acorporation that is
taxed like a sole proprietorship or partnership with
eachshareholder payingtaxonthe
amount of their proportionateshares.

12. Clarification on S-Corporations
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●
Types of S-Corps
Some professions that choose the S-corp tax include certified public accountants,
real estate agents, attorneys, construction contractors and financial advisers.
But it can be an advantage for almost any business to file its taxes as an S-corp,
especially if it has an owner-operator who makes significantly more than the average
salary in that field. For example, according to Gedeon Law & CPA, an accomplished
CPA who earns $246,000 from a self-employed S-corp could pay himself a salary of
$91,000, and save the employment taxes on more than $150,000 by taxing the rest
as a dividend payment.
From http://smallbusiness.chron.com/s-corporation-types-businesses-65481.html
With this information, you can "assume" that almost any CPA firm, Real Estate Firm,
Attorney Office (more than one lawyer) etc would be an S-Corp. The members of the
corporation would pay tax on the part that they earn. Look online or in your local
phonebook for a name of one of these types of corporations.
Another site: http://s-corp.org/about/
Under the ABOUT tab you will see their board of directors. Each has an S
corporation. Also, there is a list of ALLIES which are other S Corporations.
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13. Typesof Corporations
• Nonprofit corporation: Legal entitiesthat makemoneyfor
reasonsother thantheowner’sprofit.
▪ Examples:
o
o
o
o
Churches
Charities
educationfoundations
tradeassociations
• LimitedLiabilityCompany(LLC): Anewtypeof business
ownershipthatprovideslimited liability andtaxadvantages.
▪ Examples
o
o
Lawfirms
Medical

14. Advantagesof Corporations
•Canraisemoneybyissuingsharesof stock.
•Offersownerslimitedliability.
(Limited liability: Ownersareliable onlyuptotheamountof
their
investments.)
•People caneasilyenter or leavethebusiness
bybuyingor selling
their sharesof stock.

15. Disadvantagesof Corporations
•Legal assistanceisneededtostart a
corporation.
•Start-upiscostly.
•Corporationsaresubject tomoregovernment
regulationsthanpartnershipsor sole
proprietorships.
•Alot of paperworkisinvolvedinrunninga
corporation.
•Incomeistaxedtwice.

16. Other WaystoStart aBusiness
•Buyanexistingbusiness.
•Enter afamilybusiness.
•Ownafranchisebusiness.

17. BuyinganExisting
Business
Advantages
•Existingbusinessesalreadyhave
customers, suppliers, and
procedures.
•Seller of thebusinessmaybewillingto
train thenewowner.

18. BuyinganExisting
Business
Disadvantages
•Businessmaybefor salebecauseit isnot makinga
profit.
•Problemsmaybeinherited withthepurchaseofan
existingbusiness.
•Manyentrepreneursmaynot havethecapital
neededtopurchaseanexistingbusiness.

19. EnteringaFamilyBusiness
Facts
•Thereis acertain senseof pride andaccomplishment
that comesfrombeingpart of afamilyendeavor.
•Abusinesscanremainin thefamilyfor generations.
•Somepeopleenjoyworkingwithrelatives.
•Theefforts of runningafamily businessgive onethe
benefit of knowingthat their effortsarehelpingthose
whomtheycareabout.

20. EnteringaFamilyBusiness
Disadvantages
•Seniormanagementpositionsareoftenheldbyfamily
memberswhomaynotbethebestqualified.
•It maybedifficultto retainqualifiedemployeeswhoarenot
membersof thefamily.
•Familypoliticsmayaffect decisionsregardingthebusiness.
•It is often difficulttoseparatebusinesslife andprivate life in
family-runbusinesses.
•It is oftendifficulttosetpoliciesandprocedures andtomake
decisions.

21. OwningaFranchiseBusiness
TermsYouShouldKnow
Franchise: Alegal agreement that givesanindividual
theright tomarket acompany’sproductsor servicesin
aparticular area.
Franchisee: Apersonwhopurchasesafranchise
agreement.
Franchisor: Thepersonor companywhosellsa
franchise.
Initial franchisefee: Thefeethefranchiseowner pays
inreturnfor theright torunthe
business.

22. Purchasing a Franchise Business
Advantages
✓Anestablishedproduct or serviceis
being provided.
✓Franchisorsoftenoffer management, technical,
andother assistance.
✓Equipment andsuppliesmaybelessexpensive.
✓Aguaranteeofconsistencyattractscustomers.

23. Purchasing a Franchise Business
Disadvantages
✓Thecost of franchisesmaybehigh, whichcanreduce
profits.
✓Franchiseownersarelimited in thedecisionstheycan
makeregardingthebusiness.
✓Theperformanceof other franchisesimpact on
the franchisee.
✓Thefranchiseagreement maybeterminatedby
the franchisor.