1. Forms of Business Ownership
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2. 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.
Goals

3. Proprietorship – a business owned and run by just one person.
Easiest form of business to start and end.
Few legal requirements & capital needs
Allows for sole control over all business activity
Receives & determines how all profits
responsible for all business debt
Business Ownership

4. Partnership – a business owned and controlled by two or more people who have entered into an agreement.
Quite easy to start
Owners are responsible decisions & functions
Profits & investments are shared based on agreement
Partnership agreement – a written agreement among all owners
Each partner is liable for the debt

5. Corporation – a separate legal entity formed by documents filed with a state.
Owned by one or more shareholders
Managed by a board of directors
Difficult to form (must meet more legal requirements)
Not all owners have direct involvement in business decisions
Owners will not have access to profits unless approved by the board of directors
Corporations protect the liability of stockholders

6. Articles of incorporation – a written legal document that defines ownership and operating procedures and conditions for the business
Corporate bylaws – the operating procedures for the corp.

7. Other Forms of Ownership
Specialized Partnerships and Corp.
Limited liability partnership: identifies investors who cannot lose more than the amt. of their investment, but are not allowed to participate in day-to-day management
Joint venture: organized by tow or more other business to operate for a limited time and for a specific project.
Nonprofit Corp.: a group of people who join to do some activity that benefits the public
S-Corporation: offers limited liability of a corporation. All income is passed through to the owners based on their investment and is taxed on their individual tax returns.
Other Forms of Ownership

8. Other Forms of Ownership
S-Corporation: offers limited liability of a corporation. All income is passed through to the owners based on their investment and is taxed on their individual tax returns.
Limited Liability Company (LLC): combines the best features of a partnership and corporation
Other Forms of Ownership

9. Other Forms of Ownership
Cooperatives and Franchises
Cooperative: owned by members, serves their needs, and is managed in their interest.
Franchise: a written contract granting permission to operate a business to sell products and services in a set way.
Franchiser – the company the owns the product and service and grants the right to another business
Franchisee – the company purchasing the rights to run the business
Other Forms of Ownership