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Types of Business Ownership

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Presentation on theme: "Types of Business Ownership"— Presentation transcript:

1 Types of Business Ownership
The three different ways you can own a business are: Sole proprietorship Partnership Incorporation

2 Sole Proprietorship A sole proprietorship is a business owned by only one person.

3 Sole Proprietorship The advantages to having your own business are:
It’s easy to start You get to be your own boss You get to keep all the profits The taxes are usually low

4 Sole Proprietorship The disadvantages to having your own business are:
You have to pay for everything yourself You might have to use your personal savings or borrow money from the bank You might lack business skills continued

5 Sole Proprietorship A serious disadvantage to owning a sole proprietorship is that you have unlimited liability, or full responsibility for your company’s debts.

6 Partnership A partnership is a business owned by two or more persons who share the risks and rewards.

7 Partnership Banks are often more willing to lend money to partnerships than sole proprietorships. Your partners can bring different skills to the business.

8 Partnership The disadvantages to partnership are: continued
You not only share the risks with your partners, you also share the profits. You might not get along with your partners. You share unlimited legal and financial liability with your partners continued

9 Graphic Organizer Similarities and Differences Between
Partnerships and Sole Proprietorships Partnerships Both Sole Proprietorships Quicker decision making Owner keeps all profits Owner is own boss Relatively easy to get credit Shared decision making Pride in owning and running business Easy to set up Low taxes Unlimited liability for debts Huge time demands Increased diversity of experience Shared losses Combined funds

10 Corporation A corporation is a business owned by many people but treated by law as one person.

11 Corporation To raise money, you can sell stock, or shares of ownership in your corporation.

12 Corporation For each share of common stock, the stockholder gets a share of the profits and a vote on how the business is run. You also must have a board of directors who control the corporation.

13 Corporation A major advantage of a corporation is its limited liability. If your company loses money, the stockholders lose only what they invested.

14 Corporation Another advantage is that the corporation doesn’t end if the owners sell their shares.

15 Corporation A disadvantage of a corporation is that you often have to pay more taxes.

16 Alternative Ways to Do Business
Franchises, and nonprofit organizations offer you other ways to do business.

17 Franchise A franchise is a contractual agreement to sell a company’s products or services in a designated geographic area.

18 Franchise To run a franchise you have to invest money and pay the franchisor an annual fee or a share of the profits. In return, the franchisor offers a well-known name and a business plan.

19 Franchise You can operate a franchise yourself, as a sole proprietor, as a partnership with someone else, or even as a corporation.

20 Franchise An advantage of opening a franchise is that it’s easy to start. The name of the parent company can be a big draw for customers.

21 Franchise The disadvantage of running a franchise is that the franchisor is often very strict about how the business is run.

22 Nonprofit Organization
A nonprofit organization is a type of business that focuses on providing a service rather than making a profit.

23 Nonprofit Organization
Like a corporation, a nonprofit organization has to register with the government and might be run by a board of directors.

24 Nonprofit Organization
Because it doesn’t make a profit, a nonprofit organization doesn’t have to pay taxes.

25 Nonprofit Organization
Donors don’t receive dividends like investors, but they can deduct their donations from their taxes.

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