Business Organizations

 Profit Motive  Getting Started ◦ Entrepreneur, some one willing to take a risk. ◦ Gather relevant factors of production. ◦ Research  Competition  Demography  What else?

 Help from the government ◦ Startups- new small business ◦ Small business incubator ◦ Economic Enterprise zones ◦ Department of Commerce ◦ Help from the internet

 Expenses ◦ Start up ◦ Inventory ◦ Monthly  Advertising  Record Keeping ◦ Receipts  Risk

 Sole Proprietorship, most common type of business.  Proprietor, owner.  Profits and losses are all yours.  Unlimited liability, assets may be seized  All management is on you.  Pay taxes as personal income, saves money.

 Personal satisfaction in a job well done.  Demands on time.  Easier to get credit.  Borrowing large amounts can be tough.  Life of the business is limited.

 Two or more owners.  Limited Partnership, Partners are not equal. ◦ General Partner- run day to day affairs ◦ Limited Partner(s)  Shared profits

 More efficient, two heads are better than one but can lead to disagreements.  Tax advantage  Combines capital.  Business lasts longer, can buy one out.  Limited liability  Joint Venture- Temporary

 Time to expand  Stocks- ownership rights  Corporation- owned by many  Treated as a person  Limited Liability ◦ 1. Register the company ◦ 2. Sell stock ◦ 3. Elect a Board of Directors

 Articles of incorporation ◦ 1. Name, address, purpose ◦ 2. Names of board of directors ◦ 3. Number of shares ◦ 4. Amount of capital to be raised Corporate Charter Granted

 Common Stock ◦ Voting Rights as owner  Dividend ◦ Return on stock  Preferred Stock ◦ No voting Rights ◦ Guaranteed a dividend yearly ◦ First to get paid if failure  Bylaws- rules on selling stock

 Corporation ◦ Sell rights for name and product  Advantages ◦ Advertising ◦ Methods proven ◦ Name recognition  Disadvantages ◦ Loss of control ◦ Legal trouble possible