2.01 Types of Business Ownership
- One or more shareholders (stockholders), who have one vote per share.
- Managers, board of directors, and shareholders (stockholders).
- Filing of an article of incorporation with state government.
- One advantage is that Capital is easy to obtain. Another advantage is that Decision-making is shared.
- One disadvantage is Double taxation of profits and earnings. Another disadvantage are government regulations.
- It is a Limited Liability for Shareholders.
- Bank of America Corporation.
- Termination may have unlimited lifetime, if needed determined by charter or article of dissolution.
- Sources of investment would be purchase of stocks.
- Lowe's Home Improvement Store
- Two or more people.
- Determined by partnership agreement.
- May be one or more partners.
- Started with a partnership agreement. (varies by state.)
- Two advantages would be more capital and credit available than a sole proprietorship. Shared management responsibilities.
- Two disadvantages would be shared profits and you are responsible for each others decisions.
- Unlimited Liability (depending on type).
- An example would be Eden Limited Partnership.
- Can be terminated by the actions of the partners, bankruptcy, death, and/or court order.
- Source of investments would be personals of partners, gifts, borrowed and others may vary.
- Sam's Club and Nokia.
- One person.
- Can be managed by the owner.
- Begin buying and selling goods and services. This can vary by state.
- Two advantages would be that it is easy to form and it only has a one time taxation.
- Two disadvantages would be Limited capital and limited lifetime of owner.
- Unlimited Liability.
- Termination is determined by the decision or life of the owner.
- Sources of Investment are Personal, gifts, or borrowed, and others may vary.
Limited Liability Partnership
- Identifies some investors who cannot lose more than the amount of their investment. Investors are not allowed to participate in the day-to-day business management.
- Owned by members, serves their needs and is managed in their interest.
- Purchase goods and services are cheaper as a group than as individuals.
- Greater bargaining power than as individuals.
- Permission to operate a business to sell products and services in a set way.
- Begins with a parent company who owns the product or service and grants the right to another business.
- Franchiser: the company that owns the product.
- Franchisee: the company purchasing the right to run the business.
- Example: Burger King