1. Types of Business Organizations
Sole Proprietorship
Partnerships
Corporations
The Franchise

2. Sole Proprietorship – About 70% of Businesses

3. Advantages of sole proprietorships:
Easy to form
You make the decisions
You keep all profits
No business taxes
Easy to exit
Economic Weakness of sole proprietorship:
Unlimited Liability: you have total responsibility for all liabilities
Difficulty in raising financial capital
Limited Life – It dies with the owner

4. Partnerships – About 9% of Businesses

5. Partnerships Two major types of partnerships:
General Partnership: (most common type) all partners are responsible for management and the financial responsibilities of the partnership.
Limited Partnership: at least one partner is not active in the day to day running of the business. They have limited liability.
Articles of Partnership: contract between partners spelling out the rules of partnership.
Dividing profit
Dividing responsibility
Admitting new partners
Buying out partners

6. Partnerships Advantages of Partnerships Disadvantages of Partnerships
Benefits of Specialization: each partner has different things to offer
No special business taxes
Disadvantages of Partnerships
Unlimited liability for general partners
Limited partner is only responsible for his initial investment. He has limited liability.
Conflict between partners

7. What fits best with each business??? Tell me Why!!!

8. Corporations – About 20% of Businesses – About 83% of Profits

9. Corporation- Set up
Charter: a document granted by the state giving a corporation the right to do business
Stock: shares of ownership, or assets, in the corporation
Assets: Anything of value to which the firm has a legal claim
Stockholders (shareholders): owners of stock.
Reasons to own stock:
Dividends: share of corporate profits paid to stockholders
Speculation: buy in hope that price of stock will increase.

10. Corporations Advantages of a corporation:
Limited liability: Owners can lose only what they have invested in the firm
Unlimited life
Ease of raising financial capital
Selling stock to investors
Selling bonds: a written promise to repay a loan on a specific date
Borrowing money from banks.
Disadvantages of a corporation:
Profits are taxed twice once as Corporate income tax, and again as income tax on dividends for stockholders
Start up is complicated & can be expensive
Corporations are subject to more government regulations than sole proprietors or partners

11. Corporate structure
Stockholders: The most important persons in a corporation
The owners of the corporation
Vote for the board of directors
one vote for each share owned
Board of Directors: duty to direct the corporations business by setting board policies and goals
Decides products to sell, what % of profits go to dividends, & what % of profits go to modernization and expansion
Chooses top officers like president, secretary, & treasurer who carry out day-to-day operations

12. Corporate structure

13. Dare to Compare
Using the interwoven circles list the similarities and differences between Sole Proprietorships, Partnerships, and Corporations

14. The Franchise