1. Business Ownerships Chapter 6

2. Warm-up 1.List 5 advantages of working by yourself. 2.List 5 advantages of working with a partner. 3.If you could choose would you rather work by yourself or with a partner? Why?

3. Sole Proprietorships A sole proprietorship is a business owned by only one person.

4. Advantages It’s easy to start You get to be your own boss You get to keep all the profits The taxes are usually low

5. Disadvantages You have to pay for everything yourself You might have to use your personal savings or borrow money from the bank You might lack business skills A serious disadvantage to owning a sole proprietorship is that you have unlimited liability, or full responsibility for your company’s debts.

6. Figure 6.1 GENERATIONS OF FAMILY-OWNED BUSINESSES Family-owned businesses are sometimes kept in the family for more than one generation. What percentage of families have had their family-owned businesses for two or more generations?

7. Partnership A business owned by 2 or more people who share risks and rewards.

8. Advantages of Partnerships You might need only a license to start and have to pay taxes only on your personal profits. Each of your partners can contribute money to start the business. Banks are often more willing to lend money to partnerships than sole proprietorships. Your partners can bring different skills to the business.

9. Disadvantages of Partnerships You not only share the risks with your partners, you also share the profits. You might not get along with your partners. You share unlimited legal and financial liability with your partners.

10. Graphic Organizer Similarities and Differences Between Partnerships and Sole Proprietorships Increased diversity of experience Shared losses Combined funds Both Pride in owning and running business Easy to set up Low taxes Unlimited liability for debts Huge time demands Quicker decision making Owner keeps all profits Owner is own boss Relatively easy to get credit Partnerships Sole Proprietorships Shared decision making

11. Corporation A corporation is a business owned by many people but treated by law as one entity.

12. Corporations corporate charter needed…contract w/ state. To raise money, you can sell stock, or shares of ownership in your corporation. Decision Making: Board of Directors www.yahoo.com You also must have a board of directors who control the corporation.

13. Advantages A major advantage of a corporation is its limited liability. If a corporation loses money, the stockholders lose only what they invested. Another advantage is that the corporation doesn’t end if the owners sell their shares.

14. Disadvantage A disadvantage of a corporation is that you often have to pay more taxes. The government closely regulates corporations. Difficult to Start

15. Other types of businesses Franchises, cooperatives, and nonprofit organizations offer you other ways to do business.

16. Franchise A franchise is a contractual agreement to sell a company’s products or services in a designated geographic area. An advantage of opening a franchise is that it’s easy to start. The name of the parent company can be a big draw for customers. The disadvantage of running a franchise is that the franchisor is often very strict about how the business is run.

17. Non-Profit Organizations A nonprofit organization is a type of business that focuses on providing a service rather than making a profit. Because it doesn’t make a profit, a nonprofit organization doesn’t have to pay taxes.

18. Co-ops A cooperative is an organization owned and operated by its members for the purpose of saving money on the purchase of certain goods and services. Cooperatives pay less in taxes than regular corporations do.

19. Classifying Businesses Companies specialize in: 1.Producing raw goods 2.Processing raw goods 3.Manufacturing goods from raw or processed goods 4.Distributing goods 5.Providing services- sell services rather than goods!

20. Producer A producer is a business that gathers raw products in their natural state. Example: Farmers, Oil Miners

21. Processors Processors change raw materials into more finished products. Example: Wheat Mills, Oil Refineries

22. Manufacturers Manufacturers are businesses that make finished products out of processed goods. Example: Bakery, Automotive Plant, Pepsi Co.

23. Intermediaries An intermediary is a business that moves goods from one business to another. A wholesaler, also known as a distributor, distributes goods. A retailer purchases goods from a wholesaler and resells them to the consumer, or the final buyer of the goods.