1. Types of Business Ownership The Right Fit

2. Sole Proprietorship Business owned and operated by one person ADVANTAGES decisions are made by only the owner total control of all business processes simple process to start – just get a business license profits belong to the owner pride of ownership DISADVANTAGES unlimited liability personal assets at risk limited life of business when the owner quits or can’t work, the business ends difficult to raise capital for business owner must shoulder all losses alone

3. Partnership Business owned and operated by two or more people ADVANTAGES easy to start same as sole proprietorship except with partnership agreement - individual responsibilities and benefits few regulations easier to raise capital for business than sole proprietorship combination of partners’ knowledge and skills can strengthen business DISADVANTAGES unlimited liability personal assets at risk limited life of the business when one partner quits or can’t work, the business partnership is dissolved profits are shared among partners disagreements between partners

4. Corporation Business owned by stockholders/investors; operated by officers ADVANTAGES easy to raise capital corporations can issue stock, bonds, receive bank loans easier limited liability corporation is viewed legally as its own ‘person’ and so shareholders are not liable for its debt unlimited life of business death of an owner only means change in ownership able to hire specialized skills and knowledge DISADVANTAGES difficult to start to incorporate, a business must meet many government requirements less direct control by individual shareholders individual shareholders rarely own a high enough percentage of shares to have substantial decision-making power limited activity corporations are only able to engage in areas of business for which they have a license

5. Limited Liability It all comes down to the responsibility for the debts of the business: A sole proprietor or partnership can be held responsible for all the debts of the firm The owners of corporations can only be held responsible up to the value of their investment in the business

6. Investing in a Business Sole proprietors must raise all the finances to set up and run the business themselves Partners can all contribute to the financing of a firm Corporations can sell shares of the company to family, friends and associates OR Corporations can raise finances by selling shares on the stock market

7. Legal Responsibility Sole proprietors have no legal formalities to go through, apart from registering with the government Partnerships also have no legal formalities but may choose (should choose) to sign a Deed of Partnership Companies have to go through a series of legal formalities

8. Franchises Individual business people buy a business model from a corporation A certain percentage of revenues/profits goes back to the corporation Franchises must adhere to corporate regulations Franchises have a higher percentage of success than other businesses – due to support from corporation e.g.: McDonalds, Tim Hortons, Sports Check