Chapter 6

 Sole Proprietorship  In USA 3/4 businesses have no employees  California led solo proprietorship, closely followed by fishing states Alaska and Maine  Income is taxed only once  Need a license or permit  Unlimited Liability or full responsibility for your company’s debts. You could lose your personal property

 Partnership- owned by two or more people who share the risks and rewards  May need a permit or license  Easier to obtain capital  Partners bring different skills  Income is taxed only once  Draw up a partnership agreement that outlines the rights and responsibilities of each partner

 Corporation – owned by many people but treated by law as one person. Exits separate from its owners.  Need corporate charter (a license to run a corporation) from your State  Sell STOCK to raise money – for each share of common stock the stockholder gets a share of the profits and a vote  Need a Board of Directors who control the corp.  Major advantage is LIMITED LIABILITY. If the corporation loses money shareholders only lose the money they invested.

 Franchise – a contractual agreement to sell a company’s products or services in a geographic area.  Invest money  Pay an annual fee or share of profits  You get a well known name and business plan  It’s easy to start  Disadvantage the company is very strict how you run it

 Nonprofit Organization – type of business that focuses on providing a service rather than making a profit  Registers with the government just like a corporation and might be run by a Board of Directors  It doesn’t have to pay taxes  Rely on donations and grants instead of investors

 Cooperative – an organization owned and operated by its members for the purpose of saving money on the purchase of certain goods and services.  Its like a corporation sell stock and choose a Board of Directors to run it  Need government charter to start one  Individual owners pool their resources to buy insurance, supplies, advertising….

 Producers – a business gathers raw products in their natural state….the raw materials ….agriculture, mining, fishing and forestry.  Processors – change raw materials into more finished products.  Wheat is turned into flour  Crude oil into gasoline

 Manufacturers – businesses that make finished products out of processed goods.  They turn raw or processed goods into finished goods that require no further processing and that are ready for the market  Bakeries make bread out of flour  Auto plant makes cars out of steel  Many of the leading businesses in USA are manufacturers: Pepsi, General Electric,  Procter&Gamble, Boeing….

 Intermediaries -a business that moves goods from one business to another  It buys them, stores them and the resells them.  Wholesaler  Retailer

 Wholesaler – also known as a distributor who buys product is large quantities and then resells it in smaller quantities  Retailer – buys product from wholesaler then sells them to the consumer or the final buyer.

 Service Businesses –  provide services rather than goods.  Services are the products of a skill or an activity  Some services meet needs (doctors) some conveniences (taxi, realtor, chef, hairdresser……)  Service Industry employees ¾ of the workforce