Bell Ringer Why is it important to save money? Goals, retirement, emergency.

Entrepreneurs and business organizations

Imagine Dragon You are an entrepreneur that is coming up with an idea to make a profit or help others. Come up with your idea either with a partner or individually. It is important for an entrepreneur to consider the different organizational types before making a decision.

sole proprietorship A sole proprietorship is a business owned and operated by one person. Usually the proprietor (aka the owner) supervises the business directly. Most businesses in the U.S. have this kind of business organization (70% of all businesses, in fact).

How to start a sole proprietorship 1. Register the name of your business. 2. Check and comply with federal, state and local regulations. 3. Obtain any necessary licenses and permits. 4. Keep records and prepare tax forms.

sole proprietorship Advantages Disadvantages Easy start up Few restrictions and regulations for most. Sole power Full profits and individual taxation (does not have to pay corporate tax) Unlimited liability- paying all debt of company (exception limited liability companies) Full responsibility Limited growth potential Limited Life

partnership Business owned by two or more. Co-owners share profits and liability. Usually signed agreement. i.e. family owned, small stores, farms, medical practices, law firms, financial firms. Two types of partnerships: General - is a form of business in which all co-owners have unlimited liability for any business debts. Limited - is a type of business in which there is one or more limited partners.

Partnership General Limited Co-owners share liability All are active in business operations Share financial resources and skills to business Partners contribute capital to the frim and receive a portion of the company’s profits. DO NOT participate in day to day operations. i.e. silent partner – Limited Liability

Partnership advantages disadvantages Relative ease to start p Few restrictions and regulations Shared decision making Specialization – different skills Increased growth potential Unlimited liability for general partners. Possibility of conflict between partners Continuity issues – one partner dies or leaves partnership.

corporation A corporation is a company treated under the law as a single body with its own powers, separate from its owners. Its owners are shareholders who purchase shares of company stock. It can acquire resources, own assets, produce and sell products, incur debts, lend money, and sue and be sued. There are two kinds of corporation: privately-owned (aka closely-held) corporations and publicly-owned corporations

corporation advantages disadvantages Limited Liability Growth potential – Much higher than other kinds of business. Raise funds by issuing bonds. Professional management Longer life Complex and expensive start up Loss of control Government regulation Double taxation – tax on profits and dividends.

Multination corporations Multinational corporations are corporations which operate in more than one country. Some have very few employees, others have very many Their headquarters is one country while their manufacturing or service centers could be located there or elsewhere. They enjoy many advantages: access to more markets, less risk because of ability to operate in more than one country, and ability to tap cheaper labor and raw materials than in just one country.

Imagine dragon Based on the three types of organizations do you see a fit for your idea?

Franchise In a business franchise, a parent company grants to an independent business owner the exclusive right to use its trade name and sell its products in a designated location. In return, the franchisee makes an initial payment and must make other payments (royalties) periodically. The franchisee must also fellow other protocols connected with the trade name. Do you know any examples of a Franchise?

Cooperative A cooperative is a business that is owned and operated by a group of individuals for their shared benefit. As a rule, cooperatives are non-profit businesses. They exist in order to provide their members with affordable goods and services. Food co-ops, housing cooperatives, and discount price clubs are examples of cooperatives. Ocean Spray, Navy Federal Credit Union, and REI are all cooperatives

Nonprofit organization These organizations are established in order to support some particular public or private goals. In many respects they function much like other businesses except that they do not operate in order to make a profit. They can be organized as corporations, cooperatives, trusts, or foundations. The Red Cross and Doctors Without Borders are examples of non-profits.

Imagine dragon Does your idea fit in any of these?

Rights of a business The right to make money. The right to enter into contracts The right to advertise. The right to hire and fire employees. The right to screen employees. The right to be fairly compensated for property. The Fifth Amendment, for example, prohibits the government from taking property (via eminent domain) without paying a fair price for it. The right to protect intellectual property via patents, trademarks, copyrights, etc.

Responsibilities of a business Obtaining those licenses and permits required by law. Paying all taxes that apply to their business. Dealing honestly with customers and suppliers. Honoring contracts. Creating an equal opportunity workplace. Protecting whistle-blowers. Ensuring product safety.