Friday March 27, 2015 Types of Businesses Project Questions Agenda Homework Types of Businesses Project Questions Step 1 Check Point

Civics and Economics Day 129

Review Scarcity? Supply? Law of Supply? Law of Demand? Price Equilibrium?

Types of Businesses

Types of Business Organizations Sole Proprietorship Partnership Corporation Franchise

Sole Proprietorship A business organization run by one person. One Owner, 85% of all businesses but only 10% of the profit

Sole Proprietorship 1. Owner makes all of the decisions Advantages Disadvantages 1. Owner makes all of the decisions 2. Owner keeps all the profit 1. Hard to raise money to run business 2. Unlimited liability- you are responsible for anything wrong. 3. You are responsible for decisions and have to be organized

Partnership Two or More people make the business decisions. 5% of businesses, 20% of profits.

Partnership Easier to raise money, because there are more owners. Advantages Disadvantages Easier to raise money, because there are more owners. People can do what they are good at, use their skills. Share responsibility, everything isn’t on one person Legally, it is difficult to start-need a Articles of Partnership from the government (a contract) There are often disagreements between the owners. Unlimited Liability-each owner is responsible if another messes up. Difficult to transfer ownership.

Corporations A business organization that does not have one owner, but many People own stock Stock is a share of ownership in a company. (people who have stock are called stock holders)

Corporations Corporations must be given a charter by the government to sell stock. Decisions are made by a board of directors, elected people who run the corporation.

Corporation Must give up ownership of the company. Advantages Disadvantages Stock allows corporations to raise a lot of money. Limited Liability-Investors won’t use anymore than they invested. Most profitable The business will go on for years, because stock can easily be bought and sold. Ownership is easily transferred. Must give up ownership of the company. Corporations pay a lot in taxes. People with more stock has have more influence. Heavily regulated by the federal government, must have a charter.

Franchise Business in which a franchisor sells to another person, the rights to use the business name and to sell a product or service.

Franchise Buy a good reputation Advantages Disadvantages Buy a good reputation Supply training and financial knowledge Provide packaging, advertising, and equipment to run the franchise Can be expensive to buy May have to follow a lot of rules laid down by the franchisors If the franchisor’s business fails, so will the franchisee’s business.