Business Organizations

Three types of business organizations

Sole Proprietorship

A single owner who takes all the risks and receives all the profits.

Example- Bob owns a market and does not partnership or shares his business with anyone.

Partnership

Divides the risks and profits of a business among two or more people.

Example- Bob and Marley started their burger shack and now share it and has no corporation with the public

Corporation

Issues shares of stock to investors.

Example- Mary started a hot dog palace but wanted to avoid unlimited liability so she started a corporation on her business.

Definitions

Limited Liability

A person's financial liability is limited to a fixed sum.

Unlimited Liability

The owner is personally and fully responsible for all losses and debts of the business.

Stock

The goods or merchandise kept on the premises of a business or warehouse and available for sale or distribution.

Dividend

A check representing a portion of the corporate earnings.

Board of Directors

A body of elected or appointed members who jointly oversee the activities of a company or organization.

Which type of business is the most common

Sole Proprietorship is the most common business