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Types of Agribusinesses

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Presentation on theme: "Types of Agribusinesses"— Presentation transcript:

1 Types of Agribusinesses

2 What are the 3 types of agribusinesses?
Single (sole) Proprietorship Partnership Corporation

3 What 3 types of corporations are there?
Subchapter C Regular corporations Subchapter S Family Farms and Small Businesses Subchapter 7 Cooperatives

4 Single (Sole) Proprietorship
Ownership One person Start Up Costs Large amount of capital by owner Taxes Pay only once on the income from the company Example Tractor Repair Shop

5 Single (Sole) Proprietorship
Liability Unlimited (personal and business assets of owner) Responsibility for Decisions owner

6 Single (Sole) Proprietorship
Major Advantages Simple to start Be your own boss Few government regulations Choose own products & hours Pay taxes only once on income from company Receive all profits

7 Single (Sole) Proprietorship
Major Disadvantages Limited financial resources (capital needed to begin) Difficulty in management Overwhelming time commitment Limited growth Restriction of expansion potential Few fringe benefits

8 Partnership Ownership Start Up Costs Shared by partners Taxes Example
General (all is shared) Start Up Costs Shared by partners Taxes Income taxed only once Example Ag. Machinery Dealership, Landscape Business

9 Partnership Liability Responsibility for Decisions
Shared in General Partnership but not unlimited. Responsibility for Decisions Shared between partners in a general partnership

10 Partnership Major Advantages More financial resources
Shared management & pooled knowledge Longer survival Special skills of partner Pay no taxes as a business Limited government regulations

11 Partnership Major Disadvantages Division of profits
Disagreement among partners Difficult to terminate Dissolved when partner dies or leaves the partnership Divided management authority

12 Corporation Ownership Start Up Costs Taxes Example Many people
From multiple sources Taxes Business is taxed (double taxation) Example Phillip Morris, Procter & Gamble, Kroger

13 Corporation Liability Responsibility for Decisions
Business only (not personal) Responsibility for Decisions Board of Directors

14 Corporation Major Advantages More money for investment Perpetual life
Ease of ownership change Draw talented employees Separation of ownership from management Legal entity

15 Corporation Major Disadvantages Initial cost Paperwork
Two tax returns (double taxation) Difficulty of termination Possible conflict with board Must follow state laws Owners have limited control

16 Cooperative Ownership Start Up Costs Taxes Example
Owned & controlled by members Start Up Costs Buy shares Taxes Most are exempt (if 50% of business with members & profits returned in dividends) Example Land ‘O Lakes, Sunkist

17 Cooperative Liability Responsibility for Decisions
Members risk only the amount they have invested Limited Responsibility for Decisions Each member gets one vote

18 Cooperative Major Advantages Continues at death of shareholders
Benefits go to members Share in direction of business Broad capital base Special tax advantage Legal entity

19 Cooperative Major Disadvantages Legal formalities
Limited control over business Expensive to form, maintain, & dissolve Few persons may gain excessive power Lack of member participation

20 Franchise Ownership Start Up Costs Taxes Example
Buy “Franchise” name & products Start Up Costs Large Start Up & Franchise Costs Taxes Business is taxed Example McDonald’s

21 Franchise Liability Responsibility for Decisions Limited
Management (from above)

22 Franchise Major Advantages Nationally recognized name & reputation
Help with finding a good location Management system with successful track record Successful methods for inventory and operations Financial advice & assistance Training for owners & staff

23 Franchise Major Disadvantages Additional costs for marketing
Monthly percentage of gross sales may go to parent company Competition from other franchises Regulations: management, décor, selling, rules Coattail effects if other franchises fail nationwide

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