2. 01 Types of Business Ownership
Styrling Tangusso - 2-17-16 - 3rd period - POBF
Introduction
The three types of ownership are corporation, partnership, and proprietorship. A corporation is a business owned by shareholders and managed by a board of directors. A corporation is businesses like McDonald's and Nike. A partnership is a business owned and controlled by two or more people who have a written agreement. Two famous partnership business is Apple and Google. Apple was founded my Steve Jobs and Steve Wozniak. A sole proprietor is a business ran by one person. Two well-known sole proprietor company is Ebay and Subway. Ebay was founded individually by Pierre Omidyar. A Cooperative is owned by members and serves their needs and is managed in their interest. A franchise is given permission to operate a business to sell products and services in a set way. It begins with a parent company who owns the product or service and sells the right to another business.
Special Types of Ownership
Corporation
Corporations is an organization that is owned by one or more stockholders, also known as shareholders. It is managed by a board of directors. Business is started by the Articles of Incorporation. Two advantages of a corporation is easier to obtain stock and life of the corporation is unlimited. Two disadvantages are doubled taxation and increased government regulations. In a corporation there is limited liability for shareholders. An example of a sole proprietor is McDonald's. The business terminates with the death of the owner, unless plans are established for someone to inherit the business. One source of investment is selling a product for more than the cost to produce that product.
Partnership
In a partnership a business is owned and controlled by two or more people who have entered into a written agreement. The four types of partnerships there are is dormant, general partner, limited participant, secret partner, and silent partner. Management in a partnership depends on the partnership agreement. Two advantages to a partnership is combined resources and shared risk. Two disadvantages are shared profits and potential for disagreement among partners. There is unlimited liability depending on the type of partnership. A well-known partnership is Apple. Termination is discussed in the written agreement in what will happen in the event of termination and can vary from company to company. The primary source for funding in a partnership is the individual savings of each partner.
Proprietorship
A sole proprietorship is owned and ran by once person and is typically managed by that owner. To start a proprietorship an individual has to want to open his/her own business and typically has to get a loan from the bank. Once there is a building for the business next comes getting local registration requirements and business licenses. Two advantages to proprietorship is easy start-up and the owner receiving all profits from the business. A disadvantages of proprietorship is limited capital and the business is limited to the lifetime of the owner. In a sole proprietorship there is unlimited liability on the owner. Ownership is terminated upon the death of the owner/founder, however, the owner can also terminate the business anytime for any reason. Source of investment for a proprietorship is a personal bank loan.