1. Part I – Types of Business
Business and Labor
Part I – Types of Business

2. Sole Proprietorship single owner – most common form of business in US
Advantages
Owner makes all decisions
Keep all the profits
No corporate income tax
Easiest to set up
Disadvantages
Not an expert in all areas
Responsible for all mistakes
Unlimited Liability responsible for all debts, personal property can be taken
Hard to raise capital (money)

3. Partnership Two or more owners
Advantages
Can raise more capital
Share in responsibility
No corporate income tax
Disadvantages
Unlimited Liability responsible for all debts, personal property can be taken
Share decision making
Share profits
More complicated to set up than sole proprietorship

4. Corporation Company is owned by people who buy its’ stock
Advantages
Can raise a lot more capital ($) through sale of stocks and bonds
Decisions are made by professionals
Limited Liability only responsible for how much you have invested
Earns the most money in US
Disadvantages
Have little say in how the company is run
Only share in portion of profit
Most complicated to set up
Corporate Income Tax

5. Business Types and Profits
Sole Proprietorships = 72%
Corporations = 20%
Partnerships = 8%
Earnings
Corporations = 83%
Partnerships = 12%
Sole Proprietorships = 5%

6. How are corporations established?
Charter: government permission to organize a corporation
Stock:
shares in the company sold to the public

7. Who owns a corporation?
Stockholders

8. How are corporations run?
Owners = Stockholders who elect the
Board of Directors who select the
President who hires
VP of Sales VP of Production VP of Finance

9. What other types of business organizations are there?

10. Non-Profit Organizations Businesses that are not out for profit
Examples
Cooperatives
Nonprofit organization of people set up to carry out an economic activity

11. Franchise
Individuals buy right to use a corporations name and product

12. Thoughtful Discussion
How did Andrew Carnegie respond when workers at his steel mill went on strike at Homestead?