Unit 4—Ownership Structures Finance Foundations A Mrs. Sorrell

 Sole proprietorship  Partnership  Corporation Three Types of Business Ownership

Sole Proprietorship  Owned by one person  Small business  Jewelry store  Restaurants  Hair-styling salons  Physicians  Attorneys  Accountants  Owner pays for everything  Supplies  Advertising  Rent  Taxes  Use personal savings or borrow  More than two-thirds of U.S. business  Proprietor has complete responsibility for business decisions  Unlimited liability—full responsibility for your company’s debts  May need only a license or permit to start your sole proprietorship

Partnerships  Owned and managed by a small group  Share the risks and rewards  Written agreement (contract)  Unlimited liability for the debts of the partnership  License to start  Pay taxes only on personal profits  Easier to obtain capital  Different skills of partners  All partners equally responsible for bad decisions of one partner

Corporations  Business owned by a number of people and operated under written permission (Certificate of incorporation) from the state in which it is located  People become owners by buying shares of stock- -shareholders  Corporation is treated as one person  To raise money, you can sell shares of ownership  Each share gets a portion of the profit and a vote on business operations  Board of directors control the operation  Hire officers to run the business

Corporations, con’t.  Limited liability is the major advantage  Personal property and savings are not at risk  Owners can sell their shares and the business does not change or end  Sell new shares to raise more capital  Corporations often have to pay more taxes  Owners are taxed on their income  Corporation pays taxes also (double taxation)  Government closely regulates corporations  More difficult to start and run a corporation

E-Commerce  Buying and selling goods and services via the internet  Reach customers anywhere in the world  Catalogs on the internet save big money in printing and mailing  Consumers can shop 24/7  Privacy of the customer is of concern  Be careful where you shop  Keep a record of you receipts, order confirmations, and merchant’s Internet address  Web Trust is assurance service that combat security and privacy issues when conducting shopping, banking, and other online transactions.