Goals Understand the three major forms of business ownership Determine when each form of business ownership is most appropriate Recognize other specialized business ownership forms

The Main Idea This lessons introduces the major forms of business ownership and outlines the strengths and limitations of each

What are some advantages and disadvantages of owning your own business?

Business Ownership *It is the easier form of business to start and end. Proprietorship Business owned and run by just one person

Graphic Organizer Advantages of Sole Proprietorships Easy to start Proprietors are in charge Proprietors keep all the profits Taxes are lower than a corporation’s

Graphic Organizer Disadvantages of Sole Proprietorships Limited access to credit Many run out of money The owner may not have the necessary skills The business ends when the owner dies

Lemonade Stand Activity

Partnership Quite easy to start Partners both share investments and profits Each partner is liable for all the debts if it fails Partnership A business owned and controlled by two or more people

Graphic Organizer Advantages of Partnerships Easy to start Easier to obtain capital Easier to obtain credit Not dependent on a sole person Only taxed once Diversity in skills

Graphic Organizer Disadvantages of Partnerships Business risk is shared Unlimited legal and financial liability is shared If one partner makes a mistake, all partners are responsible

Corporation Owned by one or more shareholders Managed by a board of directors Not all owners have decision-making power Owner’s don’t have access to profits unless the BOD approves ! Corporation Separate legal entity formed by documents filed by the state

Trivia time Hint #1 They named their first daughter Lisa Hint #2 They were fired from their own corporation in 1985 only to be rehired in 1996? Hint # 3 How can you get fired from your own business!?!?!? He even hired all the people on the board!!

Graphic Organizer Advantages of Corporations Limited liability Ability to raise money by selling stock Business does not end when an owner dies

Graphic Organizer Disadvantages of Corporations Double taxation More government regulation Difficult and costly to start 1.Income is taxed. 2.Stockholders pay taxes on profits issued to them

U.S. Sole Proprietorships, Partnerships, and Corporations Figure 6.1

Partnership Agreement -Partnership Agreement Document -Partnership Agreement Document (on my wiki) -What are some pros/cons of having a partnership? Partnership Agreement Written agreement among all owners

Articles of Incorporation -Hop on an electronic device…see if you can find PA’s articles of incorporation document online. -PA’s A.O.IA.O.I -Does it look very difficult to fill out? Articles of Incorporation Written legal documents that defines ownership and operating procedures and conditions for the business.

Groups of 3…Posters Specialized Partnerships and Corporations Poster- –Term with definition –List of advantages/disadvantages –Examples –Graphic illustration

Franchise -Franchiser- The company that gives the right to use their name -Franchisee- Person purchasing the rights to run the business Franchise A written contract granting permission to operate a business in a set way.

You and your friend, Jeremiah, were helping your little brother figure out how to make molded cars from melted crayons using a kit you gave him. You decide to sell the cars at a local toy shop. Jeremiah wants to be a partner in your business. Decision Making Since Jeremiah was involved in the initial experiment, do you have an obligation to make him a partner? What about your little brother?

Answer Students might suggest that both Jeremiah’s and the little brother’s input into the process of making the cars should be rewarded in some way, especially if their ideas result in sales and profits. Having partners can help an entrepreneur launch and grow a business. However, disagreement among partners can sometimes present significant roadblocks to success.

2.Define resources. Resources are items people use to make or obtain what they need or want. Examples of resources include money, fuel, and labor.