1. Do Now
With your group… make a list of 10 steps you think are involved in starting a business.
What do you think it takes?
Resources?
Employees?
Possible issues?

2. Partnerships, Corporations, Sole Proprietorship
Business Structures
Partnerships, Corporations, Sole Proprietorship

3. Objectives and Standards
Explain the characteristics and analyze the advantages & disadvantages of sole proprietorships, partnerships, and corporations.
Compare & contrast different types of business structures.
E.23 Compare and contrast the following forms of business organization: sole proprietorship, partnership, and corporation.

4. Intro
Who has a job?
Who wants to start their own business one day?

5. Business Structure Research
Go to Miss Tyler’s Weebly site
List the 10 steps to starting a business and a brief summary for each step.
You will have about 7 minutes to do this

6. Business Structure Research
Click on Step 5 – Choose a business structure
Read about the Types of Business Structures and fill out the chart on the back of your page as you read.
You have 15 minutes
Be prepared to answer questions

7. Sole Proprietorship
Have you ever babysat? Done yardwork? Cleaned someone’s house?
Business that’s owned an managed by a single individual
Earns all of the firm’s profits and is responsible for all the firm’s debts
Full liability
Personal tax
According to the IRS – about 75% of all American businesses are SPs (~6% of sales)
Mostly small businesses

8. Sole Proprietorships
Advantages
Disadvantages

9. Sole Proprietorships Advantages Disadvantages Ease of start up
Relatively few gov’t regulations
Industry-specific (health codes, zoning laws )
All the profits
Full control
Easy to end
Unlimited personal liability
Limited access to resources
Cant raise money (no stocks)
Pay for physical capital yourself
Lack of workers (turn down work)
Lack of permanence
Cease to exist
Trouble finding/keeping good employees (can’t offer them benefits)

10. Sole Proprietorships
What are some examples of sole proprietorships in Jackson?
Why do you think some people choose to start a sole proprietorship as opposed to the other business types? What could be their motivation?

11. Partnerships
Business owned by 2+ people who agree on a specific division of responsibilities and profits.
In the US, ~7% of all businesses
~5% of all sales; ~10% of all income
Self-employment tax; personal tax
Limited Partnership
Only 1 partner has unlimited personal liability for the firm’s actions
Investors

12. Partnership
Advantages
Disadvantages

13. Partnership Advantages Disadvantages Easy to start
Shared decision-making and specialization
Larger pool of capital
Unlimited liability (unless structured as a limited partnership).
Potential for Conflict

14. Limited Liability Company (LLC)
Owners not personally liable
Self-employment tax, personal or corporate tax
Partnership (LLP) or corporation

15. LLCs
Advantages
Disadvantages

16. Corporation
Legal entity owned by individual stockholders (limited liability of firm’s debts)
Stock – a certificate of ownership in a corporation
You own stock = you are part owner of that corporation
~20% of all businesses in U.S.
Finance.yahoo.com

17. Corporation
Advantages
Disadvantages

18. Corporation Advantages Disadvantages Transferable ownership
Ability to attract capital
Long lives
Difficult/expensive to start
Double taxation
Stockholder (dividends = income)
Corporate tax
Loss of control
Board of directors/managers
Original owners lose control
More regulation
Careful records of transactions – protect shareholders
SEC – regulates stock market
FTC – prevent monopolies

19. Types of Corporations
Closely Held Corporations – only sell stock to a few people.
Publicly held corporations – sell stock to many people; open market

20. Corporate Combinations
Horizontal Merger – join two or more forms competing in the same market with the same good or service
What if McDonald’s created a horizontal merger? Who would they buy?

21. Vertical Mergers
Two or more firms involved in different stages of producing the same good or service.
T-shirt example
Disney and Pixar

22. Conglomerates Three or more businesses that make unrelated products.
Berkshire Hathaway

24. Multinational Corporations
Corporations that operate in more than one country at a time

25. MNCs
Advantages
Disadvantages

26. Cooperatives
Business that’s owned and operated for the benefit of those using its services
Elected board of directors/officers – day-to-day business
Members – voting power to control direction of the cooperative.

27. Cooperatives
Advantages
Disadvantages

28. Nonprofit Organizations
Functions like a business but does not operate for the sole purpose of making a profit
Red Cross, YMCA, adoption agencies, humane society, etc.
Professional Organizations – nonprofit; work to improve image, working conditions, skill levels of people in certain occupations
NEA, ADA, AMA, etc.

29. Nonprofits
Advantages
Disadvantages

30. Corporations Commercial Project
Test Grade
Due April 18th

31. Discussion Questions
Why do you think some people choose to start a sole proprietorship instead of a partnership?
In your opinion, what would be the most difficult types of business structure to start? Why?
Which of these would be the most difficult to maintain? Easiest?

32. Assessment (Quiz Grade)
Imagine that you write a Ask [Name] column.
Write an answer to Exhausted Entrepreneur addressing their questions and explaining what business you recommend and why.
Be sure to include some pros and cons of each type of business.

33. Advice Column Dear (Your name),
I want to start a business, but I’m not sure what kind I want to start. My parents think I should start a sole proprietorship, but my friends keep telling me that I should start a partnership. My teacher said that I’m too young to start a corporation, but I don’t even know what that is! Help! Can you explain the difference between these types of businesses and tell me which I should start and why?
Sincerely,
Exhausted Entrepreneur