1. Section 33.2 Logistics of Business Ownership
Marketing Essentials
n Chapter 33 Entrepreneurial Concepts
Section Logistics of Business Ownership

2. Logistics of Business Ownership
SECTION 33.2
Logistics of Business Ownership
What You'll Learn
How to discuss business ownership opportunities
How to identify forms of business ownership
The legal steps to take in establishing a business

3. Logistics of Business Ownership
SECTION 33.2
Logistics of Business Ownership
Why It's Important
Considering whether and how to become an entrepreneur requires knowledge of the several forms of business organization, along with the legal steps for establishing a business.

4. Logistics of Business Ownership
SECTION 33.2
Logistics of Business Ownership
Key Terms
franchise
sole proprietorship
unlimited liability
partnership
general partnership
limited partnership
corporation
stockholders
foreign corporation
Subchapter S corporation
DBA
Articles of incorporation

5. Logistics of Business Ownership
SECTION 33.2
Logistics of Business Ownership
Business Ownership Opportunities
About 150,000 businesses are started each year. There are four ways to enter business:
develop a new business
purchase a franchise business
purchase an existing nonfranchise business
take over the family business
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6. Logistics of Business Ownership
SECTION 33.2
Logistics of Business Ownership
Business Ownership Opportunities
Starting Your Own Business This approach gives you many options. You can start the business of your choice, decide where to locate, and how to set it up. You do not have to take on bad debts, a bad reputation, |or a poor location. However, you must establish every aspect of your business and create and build a reputation.
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7. Logistics of Business Ownership
SECTION 33.2
Logistics of Business Ownership
Business Ownership Opportunities
Purchasing an Existing Business When you buy a nonfranchise business, you usually receive little or no help from the previous owner. You must investigate why the business is being sold, examine the business records and the condition of the property and inventory, and determine the business's reputation.
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8. Logistics of Business Ownership
SECTION 33.2
Logistics of Business Ownership
Business Ownership Opportunities
Purchasing a Franchise Business A franchise is a legal agreement to operate a business in the name of a recognized company. The franchisee buys a business operation from a franchisor, the owner of the recognized company. The franchisor does all business planning—management training, advertising, and merchandising. Most franchises are initially very expensive to operate.
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9. Logistics of Business Ownership
SECTION 33.2
Logistics of Business Ownership
Business Ownership Opportunities
Taking Over the Family Business As with purchasing any existing business, you must review business records, the overall condition of the property and inventory, and determine the business's reputation. In addition, you need to explore potential conflicts and concerns with family members.
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10. Logistics of Business Ownership
SECTION 33.2
Logistics of Business Ownership
Forms of Business Organization
The legal form of business organization you select may make the difference between business success and business failure. Your choices of business organization are:
sole proprietorship
partnership
corporation

11. Logistics of Business Ownership
SECTION 33.2
Logistics of Business Ownership
Sole Proprietorship
A sole proprietorship—the most common form of business ownership—is owned and operated by one person.
Example: Plumbers, auto mechanics, writers
Advantages: Complete control, owner keeps all profits, easy to start, taxed less than other businesses
Disadvantages: Unlimited liability—the owner is personally responsible for all debts and legal judgments

12. Logistics of Business Ownership
SECTION 33.2
Logistics of Business Ownership
The Partnership
A partnership is a legal agreement between two or more people to be jointly responsible for the success or failure of a business. A partnership is subject to relatively little regulation and is fairly easy to establish. There are two types of partnerships:
general
limited
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13. Logistics of Business Ownership
SECTION 33.2
Logistics of Business Ownership
The Partnership
General Partnership Each partner shares in the profits and losses. Each partner has unlimited liability for business debts.
Limited Partnership Each partner is liable for any debts only up to the amount of his or her investment in the company. One general partner has unlimited liability.
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14. Logistics of Business Ownership
SECTION 33.2
Logistics of Business Ownership
The Corporation
A corporation is a business that is chartered by a state and legally operates apart from the owner(s). The value of a corporation is divided into equal units called shares of stock which are owned by stockholders. The company can own assets and borrow money without directly involving the shareholders.
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15. Logistics of Business Ownership
SECTION 33.2
Logistics of Business Ownership
The Corporation
Corporations can be incorporated in any U.S. state. A foreign corporation is incorporated under the laws of a different state from the one in which it does business.
A subchapter S corporation is a small business that is taxed like a partnership or proprietorship.
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16. Logistics of Business Ownership
SECTION 33.2
Logistics of Business Ownership
The Corporation
There are four key advantages to corporations:
The owners have limited liability.
It is easier for a corporation to raise money for expansion.
Stockholders can easily enter and leave the business.
Each operation area of the business can be professionally managed.
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17. Logistics of Business Ownership
SECTION 33.2
Logistics of Business Ownership
The Corporation
There are disadvantages to corporations:
Formation is complex.
Increased government regulation.
Higher taxes on the profits of the corporation and on each stockholder.
Accounting and record keeping are intricate.
Slide 4 of 4

18. Logistics of Business Ownership
SECTION 33.2
Logistics of Business Ownership
Legal Steps in Establishing Your Business
When you establish a sole proprietorship or partnership, you must file for a DBA (Doing Business As) at your local county clerk's office. This registers your business and protects your business name.
When forming a corporation, you must file Articles of Incorporation with the corporation and securities bureau in your state department of commerce.
Slide 1 of 2

19. Logistics of Business Ownership
SECTION 33.2
Logistics of Business Ownership
Legal Steps in Establishing Your Business
Depending on what business you enter and where you locate, you may have to obtain one or more licenses. Individual states license doctors, attorneys, accountants, cosmetologists, barbers, marriage counselors, and pharmacists to protect the public from unqualified people and to maintain the health and welfare of the citizens.
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20. Reviewing Key Terms and Concepts
ASSESSMENT
33.2
Reviewing Key Terms and Concepts
1. What are four ways to enter into a business?
2. What are the three basic forms of business ownership?
3. What legal steps must you take to establish a sole proprietorship or partnership?
4. What legal steps must you take to establish a corporation?
5. What is a Subchapter S corporation?

21. ASSESSMENT Thinking Critically 33.2
Which of the four ways to enter a business would you use to start your own business? Explain your decision.

22. 33.2
Graphic Organizer
Similarities and Difference Between Partnerships and Sole Proprieterships
Partnerships
Sole Proprieterships
Similarities
Quicker decision making
Owner keeps all profits
Owner is own boss
Relatively easy to get credit
Shared decision making
Increased diversity of experience
Shared losses
Combined funds
Pride in owning and running business
Easy to set up
Low taxes
Unlimited liability for debts
Huge time demands

23. Marketing Essentials
End of Section 33.2