2.01 Types of Business Ownership
-By: Sarah Shook-Date: 2/17-POBF-3rd-
Cooperatives
- Owned by members
- Purchase goods and services at a cheaper rate
- Greater buying power
Specialized Partnerships and Corporations
- Treat partners as individuals only taxing them once
- Limited liability for owners
- Non-profit corporation
Franchise
- Permission to operate a business to sell products and services in a set way
- Begins with a parent company who owns the product
- Ex- Mcdonalds, Burger King, Cookout....etc.
Corporation
- Owned by one or more shareholder
- Managed by a board of directors
- A corporation is started by the Articles of Incorporation
- Ownership is determined by purchase of stock
- A stock holder owns a piece of the company
- Easier to obtain capital
- Limited liability for shareholders
- Life of the corporation is unlimited
- Double taxation
- Increased government regulations and legal restrictions
- Decision making shared among managers, board of directors, and share holders
- Purchase of stock
Partnership
- Owned and controlled by 2 or more people who have entered into a written agreement
- Management of the company depends on the partnership agreement
- Ownership is determined by the partners in the written agreement
- Limited Liability Partnership- Identifies some investors who cannot lose more than the amount of there investment. This kind of partnership does not allow them to participate in the day-to-day business management
- Dormant Partnership- Plays no role and is not known to the public
- General Partnership- Plays an active role and has unlimited liability
- Limited Partnership- Participate as investors and have limited liability
- Secret Partnership- Plays an active role but is secret from society
- Silent Partnership- Does not have an active role but is known to the public
- More capital and credit available than a sole proprietorship
- Combined resources
- Shared management and risks
- Shared profits
- Responsible for each others decisions
- Potential for disagreements
- Unlimited liability (depending on type)
- Personals of partners, gifts borrowed and others may vary
Sole Proprietorship
- One owner
- The manager may be the owner. Owner participates in all day-to-day operations
- Business is started by beginning to buy and sell goods or services
- Whoever starts the business owns it
- Easy to form
- Complete control of business
- Receives 100% of profit
- Limited capital
- Unlimited liability
- Limited lifetime of owner
- Personal, gifts borrowed, and others may vary