1. Types of Business Organizations

2. Sole Proprietorship- 72% of businesses
Advantages of sole proprietorships
Ease of start up
Ease of Management
You keep all profits
You do not have to pay any business taxes
Psychological advantages
Ease of exit
Economic Weakness of sole proprietorship:
Unlimited Liability: you have total responsibility for all debts and liabilities of the company
Difficulty in raising financial capital
Limited size and efficiency
Limited managerial experience
Limited Life

3. Activity If you started your own business what would it be?
What are some of the 4 Factors of production you would need.
2 examples for each
Capital
Enterprise
Labor
Land

4. Partnerships-9% of Businesses
Two major types of partnerships:
General Partnership: (most common type) all partners are responsible for management and the financial responsibilities of the partnership.
Limited Partnership: at least one partner is not active in the day to day running of the business. They have limited liability.
Articles of Partnership: contract between partners spelling out the rules of partnership.
Dividing profit
Dividing responsibility
Admitting new partners
Buying out partners

5. Partnerships Advantages of Partnerships: Ease of establishment
Ease of Management: each partner has different things to offer-specialization
No special business taxes
Easier to raise financial capital
Larger than sole proprietorship
Easier to attract qualified workers
Disadvantages of Partnerships
Unlimited liability
Limited partner is only responsible for his initial investment. He has limited liability.
Limited Life
Conflict between partners

6. Corporations- 20% of Business 74%-profits

7. Corporations
The corporate entity is the most complex AND the most administratively burdensome type of all business organizations.
It also has the greatest variance, coming in small, medium, and large, and from one to one million owners.

8. Corporation- Set up Incorporate: to form a corporation.
Charter: a document granted by the state giving a corporation the right to do business
Stock: shares of ownership in the corporation
Stockholders (shareholders): owners of stock.
Reasons to own stock:
Dividends: share of corporate profits paid to stockholders
Speculation: buy in hope that price of stock will increase.

9. The Articles of Incorporation
The document that sets out the rules for running the company’s internal affairs
Includes the names of the incorporators (the responsible parties), the amount of stock it will be authorized to issue and its purpose
Determines the rights and obligations of members and directors
Shareholders elect a board of directors

10. Corporations Advantages of a corporation:
Ease of raising financial capital (main advantage)
Selling stock to investors
Selling bonds: a written promise to repay a loan on a specific date
Principal: the amount borrowed
Interest: the price paid for the use of another’s money
Borrowing money from banks.
Ability to hire
Limited liability
Unlimited life
Ease of transferring ownership:. Buying and selling stock is easy and is done millions of times a day
Disadvantages of a corporation:
Start up expenses are high.
Stockholders (owners) have a limited
Profits are taxed
Corporations are subject to more government regulations than sole proprietors or partners

11. Limited Liability Company (LLC)
A very new creation that merges the basic sought after benefits of Limited Liability and Single Taxation with little administrative complexity.
Advantages
Disadvantages
Limited Liability
Growth (perhaps)
Single Taxation
People Resources
Ease of Creation
Flexibility

12. HOW TO FILE AN LLC
Choose an available business name that complies with your state's LLC rules.
File formal paperwork, usually called articles of organization, and pay the filing fee (ranging from about $100 to $800, depending on your state's rules).
Create an LLC operating agreement, which sets out the rights and responsibilities of the LLC members.
Publish a notice of your intent to form an LLC (required in only a few states).
Obtain licenses and permits that may be required for your business.

13. What Is a Nonprofit? Tax & regulatory definition: an organization that
- Enjoys special tax status
- Faces a non-distribution constraint (profit=0)
Functional definition: an organization that forms to
- Perform “public tasks”
environmental protection, social service provision
- Perform tasks for which there is demand but no supply from for-profits or governments
religious activity, art museum
- Influence the direction of public policy
political party, issue organization

14. Not conducted or maintained for the purpose of making a profit.
NONPROFIT
Not conducted or maintained for the purpose of making a profit.
not commercially motivated
A nonprofit organization is one that has committed legally not to distribute any net earnings (profits) to individuals with control over it such as members, officers, directors, or trustees. It may pay them for services rendered and goods provided.

15. NONPROFIT
A nonprofit organisation is formed for the purpose of serving a public or mutual benefit other than the pursuit or accumulation of profits for owners or investors. The nonprofit sector is a collection of entities that are organisations; private as opposed to governmental; non-profit distributing; self-governing; voluntary; and of public benefit .

16. Nonprofit
A nonprofit organisation is formed for the purpose of serving a public or mutual benefit other than the pursuit or accumulation of profits for owners or investors. The nonprofit sector is a collection of entities that are organisations; private as opposed to governmental; non-profit distributing; self-governing; voluntary; and of public benefit .