Types of Business Ownership

Emma McGath 2/17/2016 Second Period POFB

Sole Proprietorship

A Sole Proprietorship is a business owned and ran by one person, normally managed by the owner.


Positives:

  • Easy to form
  • Owner has all complete control


Negatives:

  • Limited capital
  • Unlimited liability

More information:


  • Began by buying and selling goods and services.
  • It ends by decision or death of owner.
  • How they get there investment: Personal, gifts, borrowed, and others.



Example: A lemonade stand

Partnership

A Partnership is a business owned and ran by two or more people, who have a written agreement. Manager is determined in agreement.


Positives:

  • More capital and credit
  • Combined resources as in money and expertise


Negatives:

  • Shared profits
  • Responsible for the others decisions


More Information:


  • Began with a partnership agreement.
  • Termination; actions of partners, bankruptcy, death, or court order
  • Investment; Personals of partner or partners, gifts, borrowed, and others
  • Unlimited liability


Roy and Ryans lawn care




Examples: Apple Inc

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Corporations

A Corporation is a business owned by one or more shareholders and managed by a board of directors. Ownership is determined by purchase of stock. A shareholder or stockholder owns some of the company, and is allowed one share of common stock and is allowed one vote per stock.


Positives:

  • Easier to keep capital (stock)
  • Limited liability of Shareholders


Negatives:

  • Double taxation
  • Increased government and legal restrictions


More Information:


  • Formation; Fill out a "Article of Corporation" with state government
  • Termination; Unlimited Lifetime, if needed determined by charter or "Article of Dissolution"
  • Investment; Purchase of stock




Example: Nike

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Coopertives

Cooperatives are owned by members, serves their NEEDS and is managed in their INTEREST. They purchase goods and services cheaper as a group than as individuals. Better bargaining power than individuals.
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Franchise

A Franchise is a business that was apart of a Corporation who got permission to operate a business and sell there products and services in a "set way". A "parent" company who owns the product or service gives the right to another business. Franchiser is the company who owns the product, a Franchisee is the company who is buying the right to run the business.


Example: Lexington, North Carolina's McDonald's

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Types of Partnerships

Dormant Partner is a partner who plays no role and is not known in public.

General Partner is a partner who has a active role and unlimited liability.

Limited Partner is a partner who participates as a investor but has limited liability.

Secret Partner is a partner who plays an active role but is secret from society.

Silent Partner is a partner who doesn't have a active role but is known to the public.

Specialized Corporation

S-corporation; Treats partners as individuals by taxing them once.

LLC; Provides Limited liability for owners

Nonprofit corporation; a group of people who join to do some activity that benefits the public.

Domestic; Chartered in Specific state

Foreign; chartered in one state but doing business in another.

Alien; established for another nation but doing business in another state.

Public; established for a government purpose.

Private; established by individuals for business or charitable purposes.