1. Chapter 6 Business Ownership and Operations
6.1
Types of Business Ownership

2. Organizing a Business 3 main types of business ownership
Sole Proprietorship
Partnership
Corporation
Entrepreneurs must decide which type best fits their situation . During the life of a business, the form can change.
What percentage of businesses in the U.S. are:
Sole Proprietorships
72%
Partnerships 5%
Corporations
20%
Other 3%

3. Sole Proprietorship
Sole Proprietorship: a business owned by one person
Some Advantages:
Easy to start
In charge of their own business
Some Disadvantages
Unlimited Liability: the owner is responsible for the business’ debt.
Limited access to credit

4. Partnership
Partnership: a business owned by two or more people who share its risk and rewards.
Some Advantages:
Easy to start
Easier to get financing than sole proprietorship
Some Disadvantages
All partners share the risk
Partner disputes on how to run the business

5. Corporations
Corporations: a company that is registered by the state and operates apart from its owners.
Some Advantages:
Limited Liability: holds a firm’s owners responsible for no more than the capital that they have invested in it.
Easy to raise money by selling stocks.
Some Disadvantages:
Pay taxes on income and stockholders pay taxes on profits issued to them
Government regulation

6. Other Ways to Organize a Business
Cooperative: an organization that is owned and operated by its members.
Nonprofit Organization: a type of organization that focuses on providing a service, but do not make a profit.
Since they do not make a profit, they do not pay taxes.
Franchise: a contractual agreement to use the name and sell the products or services of a company in a designated geographic area.

7. Homework Ch. 6 Definitions-Packet Review the questions on pg 98, 1-3
Complete the Reading Activity and Graphic Organizer for 6.1