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3.06Classify the Forms of Business Ownership What do you know?

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Presentation on theme: "3.06Classify the Forms of Business Ownership What do you know?"— Presentation transcript:

1 3.06Classify the Forms of Business Ownership What do you know?

2 SOLE PROPRIETORSHIP   ONE OWNER   70 % OF THE U.S. (WANDA IS THE OWNER OF THE VILLAGE STORE)

3 SOLE PROPRIETORSHIP ADVANTAGES   EASY TO STARTUP.   LIMITED GOVERNMENT REGULATIONS INCLUDING TAXES. (TAXED LESS THAN OTHER FORMS OF BUSINESSES)   ALL PROFITS GO TO THE OWNER.   FREEDOM OF MAKING BUSINESS DECISIONS.

4 SOLE PROPRIETORSHIP DISADVANTAGES   UNLIMITED LIABILITY – –BUSINESS LOSSES – –BUSINESS DEBTS   SOLELY RESPONSIBLE FOR ALL ASPECTS OF BUSINESS.   LIFE OF THE BUSINESS IS LIMITED.

5 PARTNERSHIP   TWO OR MORE OWNERS. – –General Partnership   Share equally in profits or losses.   Each partner liable for all debts. – –Limited Partnership   Liable up to amount of investment..   Must have at least one general partner who has unlimited liability.   < 10% OF U.S. BUSINESSES. (JOE AND JOHN OWN A MUSIC STORE)

6 PARTNERSHIP ADVANTAGES   RELATIVELY INEXPENSIVE TO START.   COMBINE FINANCIAL RESOURCES AND KNOWLEDGE.   SHARED MANGEMENT RESPONSIBILITIES.   INCREASED POTENTIAL FOR PROFITS.   SHARED RESPOSIBILITY FOR RISK.   TAXED LESS THAN A CORPORATION.   A CHANGE IN OWNERSHIP DOES NOT ALTER CONTINUITY OF THE BUSINESS.

7 PARTNERSHIP DISADVANTAGES   PARTNERS MAY DISAGREE ON DECISIONS.   DECISION OR ACTION OF ONE PARTNER IS LEGALLY BINDING ON OTHER PARTNER.   IF ONE PARTNER DIES, BUSINESS MUST BE REORGANIZED.

8 CORPORATION   A BUSINESS OWNED BY STOCKHOLDERS.   A LEGAL ENITY CHARTERED BY THE STATE.   BOARDS, DIRECTORS, AND OFFICERS MANAGE THE DAILY OPERATIONS OF A CORPORATION. (MICROSOFT)

9 CORPORATION TYPES   PRIVATE (CLOSED): DO NOT OFFER SHARES OF STOCK TO THE PUBLIC.   PUBLIC (OPEN): SHARES OF STOCK OFFERED TO THE PUBLIC.

10 CORPORATION ADVANTAGES   DELEGATION OF SPECIFIC MANAGEMENT SKILLS.   LIMITED LIABILITY TO STOCKHOLDERS.   EASIER TO SECURE CAPITAL.   STOCHOLDERS CAN EASILTY ENTER OR LEAVE THE BUSINESS.

11 CORPORATION DISADVANTAGES   GOVERNMENT REGULATIONS.   COMPLEX TO STARTUP AND DISSOLVE.   DOUBLE TAXATION. – –CORPORATION – –STOCKHOLDERS   COMPLEX RECORD KEEPING

12 LIMITED LIABILITY COMPANY (LLC) COMBINATION OF PARTNERSHIP AND CORPORATION.

13 LIMITED LIABILITY COMPANY ADVANTAGES   PASS-THROUGH TAXATION – –EARNINGS TAXED ONLY ONCE. – –SIMILAR TO PARTNERSHIP.   LIMITED LIABILITY (OWNERS ARE NOT INDIVIDUALLY RESPONSIBLE FOR THE DEBTS OF LLC)   FLEXIBILITY IN STRUCTURE AND MANAGEMENTOF THE BUSINESS.

14 LIMITED LIABILITY COMPANY DISADVANTAGES   EXPENSE TO STARTUP.   EXTENSIVE RECORD KEEPING.   IF MEMBER LEAVES, IT CAN DISOLVE THE LLC.


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