Unit 4: Business and Labor Chapter 8: Business Organizations Section 1: Sole Proprietorships

Introduction Business Organization Who owns the business? How do the owners work together? How is the business run? Who makes the final decisions? Who pays the bills? Who gets the profits? Who is responsible if something goes wrong? Business organization is the structure which runs a company.

Sole proprietorships Who owns the business? Who runs the business? A SINGLE (sole) individual Who runs the business? Who controls all of the business profits? Who is responsible for all of the debts?

Sole Proprietorships Most of American businesses are sole proprietorships. However, they only generate 4% of all US sales. What can you guess about sole proprietorships based on the statements above?

Sole Proprietorships Entrepreneurial Spirit Work for someone else? Work for MYSELF! Required Characteristics Ambitious Risk-taker Organized Responsible Energetic Goal-oriented Business-smart

Sole Proprietorship Benefits! Easy to start-up Small legal expense Little paperwork Business license From local government Perhaps state certifications Occupancy certificate Name registration

Sole proprietorship Benefits! Few regulations (compared to other business organizations) Receive all of the PROFITS!!!! Total control

Sole Proprietorship Disadvantages Unlimited PERSONAL liability You are responsible (liable) for all costs – including lawsuits! Liability includes your PERSONAL property

Sole proprietorship Disadvantages Limited access to resources MONEY to start-up or expand comes from YOU Limited skills Limited time Lack of permanence If the owner dies or retires Workers leave because of limited fringe benefits

Sole proprietorship Summary:

Sole proprietorship Your Turn: Create a “T-Chart” which lists at least THREE advantages and THREE disadvantages of sole proprietorships. Place a STAR next to the MOST important one (your opinion) in each column. Sole Proprietorships Advantages Disadvantages 1 ~~ 2 ~~ 3 ~~ 1 ~~ 2 ~~ 3 ~~