1. Chapter 6: Business Ownership and Operations
Introduction to Business
Unit II: Business Ownership and
Environments

2. Types of Business Ownership
Sole Proprietorship
Partnership
Corporation

3. Sole Proprietorship A business owned by only one person Advantages
Easy to start (license or permit)
Be your own boss
Keep all profits
Disadvantages
Pay for everything yourself
Requires business skills
Unlimited liability (full responsibility for company’s debts)

4. Partnership
A business owned by two or more persons who share risks and rewards
Partnership agreement outlines rights and responsibilities of each partner
How much money each partner will invest
How you will share the profits
How you will share the work
How you will end the partnership

5. Partnership continued
Advantages
Easy to start (may only need a license)
Pay taxes only on personal profit
Easier to obtain capital
Wider variety of skills
Disadvantages
Share profits
Might not get along
Share unlimited legal and financial liability with partners

6. Corporation
A business owned by many people, but treated by the law as one person
Can own property, pay taxes, make contracts, and be sued
Exists separate from owners
Forming a corporation requires a charter (license) from the state
Funding a corporation requires
Selling stock (shares of ownership)
Forming a board of directors (hires senior officers)

7. Corporation continued
Advantages
Limited liability (stockholders lose only what they invest)
Doesn’t end when owners sell shares
Raise more capital by selling new shares
Disadvantages
Pay more taxes
Federal and state governments tax corporate profits
Owners taxed on income from corporation
Close government regulation
More difficult to start and more complicated to run

8. Business Ownership / Parenthood
Sole Proprietorship
Single-parenthood
Partnership
Parenting with a spouse
Corporation
Child (business) becomes an adult

9. Questions for Discussion
Why might two or more people decide to form a partnership instead of each forming a sole proprietorship?
Working as a team member is similar to being in a partnership. What are some advantages and disadvantages of working with others? (Consider your own experiences in school.)
There are more sole proprietorships than partnerships or corporations in the United States. Why do you think so many businesses are organized as sole proprietorships?