1. Types of Agribusinesses

2. What are the 3 types of agribusinesses?
Single (sole)
Proprietorship
Partnership
Corporation

3. What 3 types of corporations are there?
Subchapter C
Regular corporations
Subchapter S
Family Farms and Small Businesses
Subchapter 7
Cooperatives

4. Single (Sole) Proprietorship
Ownership
One person
Start Up Costs
Large amount of capital by owner
Taxes
Pay only once on the income from the company
Example
Tractor Repair Shop

5. Single (Sole) Proprietorship
Liability
Unlimited (personal and business assets of owner)
Responsibility for Decisions
owner

6. Single (Sole) Proprietorship
Major Advantages
Simple to start
Be your own boss
Few government regulations
Choose own products & hours
Pay taxes only once on income from company
Receive all profits

7. Single (Sole) Proprietorship
Major Disadvantages
Limited financial resources (capital needed to begin)
Difficulty in management
Overwhelming time commitment
Limited growth
Restriction of expansion potential
Few fringe benefits

8. Partnership Ownership Start Up Costs Shared by partners Taxes Example
General (all is shared)
Start Up Costs
Shared by partners
Taxes
Income taxed only once
Example
Ag. Machinery Dealership, Landscape Business

9. Partnership Liability Responsibility for Decisions
Shared in General Partnership but not unlimited.
Responsibility for Decisions
Shared between partners in a general partnership

10. Partnership Major Advantages More financial resources
Shared management & pooled knowledge
Longer survival
Special skills of partner
Pay no taxes as a business
Limited government regulations

11. Partnership Major Disadvantages Division of profits
Disagreement among partners
Difficult to terminate
Dissolved when partner dies or leaves the partnership
Divided management authority

12. Corporation Ownership Start Up Costs Taxes Example Many people
From multiple sources
Taxes
Business is taxed (double taxation)
Example
Phillip Morris, Procter & Gamble, Kroger

13. Corporation Liability Responsibility for Decisions
Business only (not personal)
Responsibility for Decisions
Board of Directors

14. Corporation Major Advantages More money for investment Perpetual life
Ease of ownership change
Draw talented employees
Separation of ownership from management
Legal entity

15. Corporation Major Disadvantages Initial cost Paperwork
Two tax returns (double taxation)
Difficulty of termination
Possible conflict with board
Must follow state laws
Owners have limited control

16. Cooperative Ownership Start Up Costs Taxes Example
Owned & controlled by members
Start Up Costs
Buy shares
Taxes
Most are exempt (if 50% of business with members & profits returned in dividends)
Example
Land ‘O Lakes, Sunkist

17. Cooperative Liability Responsibility for Decisions
Members risk only the amount they have invested
Limited
Responsibility for Decisions
Each member gets one vote

18. Cooperative Major Advantages Continues at death of shareholders
Benefits go to members
Share in direction of business
Broad capital base
Special tax advantage
Legal entity

19. Cooperative Major Disadvantages Legal formalities
Limited control over business
Expensive to form, maintain, & dissolve
Few persons may gain excessive power
Lack of member participation

20. Franchise Ownership Start Up Costs Taxes Example
Buy “Franchise” name & products
Start Up Costs
Large Start Up & Franchise Costs
Taxes
Business is taxed
Example
McDonald’s

21. Franchise Liability Responsibility for Decisions Limited
Management (from above)

22. Franchise Major Advantages Nationally recognized name & reputation
Help with finding a good location
Management system with successful track record
Successful methods for inventory and operations
Financial advice & assistance
Training for owners & staff

23. Franchise Major Disadvantages Additional costs for marketing
Monthly percentage of gross sales may go to parent company
Competition from other franchises
Regulations: management, décor, selling, rules
Coattail effects if other franchises fail nationwide