1. Business Organizations

2. Business Organization
Business is a profit-seeking enterprise that produces goods or services or carries on commercial enterprise.

3. Sole Proprietorship Most common form - most numerous
A single owner-controlled business
Easy to form; easy to end business
Doesn’t share profit, doesn’t pay special tax
Sense of personal freedom
75% of all businesses

4. Disadvantages of Sole Proprietorship
Has unlimited liability
Difficulty raising capital
Limited life
Inefficiency
Limited managerial experience

5. Partnership- jointly owned by two or more persons
Limited Partnership: no active role in running business – limits liability
General Partnership: all partners responsible for management and financial obligations
Limited Liability Partnership:
all partners are limited partners

6. Partnerships Strengths
Easy to start
Lack of special taxes
Easier to attract financial capital than a sole proprietorship
Shared decision making

7. Partnerships Weaknesses
Liability for other partner as well as personal liability
Limited life
Potential for conflict

8. Corporation – separate legal entity
Artificial person
Files charter to form
Sells stock
Ownership divided to shareholders or stockholders
Pays dividend
Two types of stock
common stock
preferred stock

9. Types of Corporations
Closely Held Corporations: also known as privately held corporations. Stock is issued to only a few people, often family members
Publicly Held Corporations: Many shareholders who can buy and sell stock on the open market

10. Corporation Strengths
Ease of raising financial capital
Hire professional to run corporation
Limited liability
Unlimited life
Ease of transferring ownership
90% of sales

11. Corporation Weaknesses
Difficult to start
Shareholders have little say in how business is run
Must pay special tax (taxed twice)
More government regulation