1. TYPES OF BUSINESSES

2. SOLE PROPRIETORSHIP
A business that is owned and managed by one individual who receives all the profits and bears all the losses.

3. Benefits: Sole Proprietorship
Ease of starting and going out of business
Control over profits and business operations
Pride of ownership
Lower taxes (pays no corporate income taxes)

4. Costs: Sole Proprietorship
Unlimited liability
Difficulty in raising financial capital
Responsible for all losses
Management knowledge may be limited

5. PARTNERSHIP
A business that is owned and managed by two or more individuals who receive all the profits and bear all the losses.

6. Benefits: Partnership
Easier to raise financial capital
Partners may combine managerial skills
Personal satisfaction
Lower taxes (pays no corporate income taxes)

7. Costs: Partnership Unlimited liability Shared profits
Possible conflicts between partners
Possible instability after death of a partner

8. CORPORATION
A business that is owned by stockholders and has rights and responsibilities as if it were a person.

9. Benefits: Corporation
Limited liability
Greater financial capital
Unlimited life
Specialized management

10. Costs: Corporation Increased taxation (pays corporate income taxes)
Difficulty in starting (each state has its own rules for a corporate charter)
May be larger, more bureaucratic than other forms of business
Increased government control

11. Which type is best? Depends on your situation!
They all have strengths and weaknesses.
What is your opinion?

12. Profit vs Non Profit
Profit: is the money a business makes after all the Expenses
Regardless of whether the business is a couple of kids running lemonade stand or a publicly traded multinational company.
A for profit business: is one that uses it’s surplus revenues how ever it likes.
A non profit business: is an organization that uses surplus revenues or donations to achieve its goals rather than distributing them as profit or dividends

13. Attributes of a for profit business
Their success is often measured by how much money they make.
Always have paid employees.
Business is run off of their companies capital.
Any profit that is gained goes to the business’s owners and can be distributed however they like.
Owned by one or more people.

14. Attributes of a non profit business
Their success is often measure by how well they are accomplishing their goals.
Not always but usually have paid employees
Run off of their companies capital, which many times includes large donations from outside sources.
Are permitted to generate surplus revenues, but it must be reinvested in the business. The owners can’t retain it for themselves and it’s not for giving employees bonuses.
Usually governed by a board of directors