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Module3 forms of-business-organization
- 1.
- 3. EXPECTATIONS 1. Analyze theforms and economic roles of business organizations.
- 4. Environmental Forces andEnvironmental Scanning
- 5. it isa business organized by one person
- 6. Easy andinexpensive to register Low start-up cost All profits go to owner Owner in direct control Some tax advantages - a lower tax bracket when profits are low
- 7. Unlimited liability(if you have business debts, claims can be made against your personal assets to pay them off) Lack of continuity Difficulty in raising capital Income is taxable at personal rate – thus, a higher tax bracket if business is profitable
- 8. it isa business owned by two or more individuals who contribute money, property and talent . These individuals are called partners
- 9. Types of Partnershipsthat should be considered: 1. General Partnership 2. Limited Partnership and Partnership with limited liability 3. Joint Venture
- 10. General Partnership Partners divideresponsibility for management and liability, as well as the shares of profit or loss according to their internal agreement. Equal shares are assumed unless there is a written agreement that states differently.
- 11. Limited Partnership andPartnership with limited liability “Limited” means that most of the partners have limited liability (to the extent of their investment) as well as limited input regarding management decision, which generally encourages investors for short term projects, or for investing in capital assets. This form of ownership is not often used for operating retail or service businesses. Forming a limited partnership is more complex and formal than that of a general partnership.
- 12. Joint Venture Acts likea general partnership but is clearly for a limited period of time or a single project. If the partners in a joint venture repeat the activity, they will be recognized as an ongoing partnership and will have to file as such and distribute accumulated partnership assets upon dissolution of the entity.
- 13. Easy andinexpensive to form Low start-up costs Sharing of responsibility Tax advantage — lower tax bracket if income from the partnership is low or loses money.
- 14. Unlimited liability Lack of continuity Difficulty in finding a suitable partner Divided authority High tax bracket if income from the partnership is high
- 15. - it isa business organized as a separate legal entity/artificial person from the owners. As a legal entity it can enter into contracts, buy and sell property and stocks
- 16. Limited liability Ownership is transferable Specialized management Ease of raising capital Possible tax advantage as taxes may be lower for an incorporated business
- 17. Close regulation Most expensive to organize Extensive record keeping Possible conflict between shareholders and directors
- 18. - it isa business owned and controlled by an association of members who have voluntarily joined together to achieve a lawful common social or economic end
- 19. Owned andcontrolled by its members Democratic control (one member, one vote) Limited liability Profit distribution
- 20. Longer decision-makingprocess Participation of all members is required in order to succeed Possible conflict between members Extensive record keeping