2.01 Types of Business Ownership

By: Alex Mitchell

Special Types of Ownership

-Corporation: a company or group of people authorized to act as a single entity and recognized as such in law.

-Franchise: an authorization granted by a government or company to an individual or group enabling them to carry out specified commercial activities providing a broadcasting service or acting as an agent for a company's products.

- A type of specialized partnership is Limited Liability partnership.

Coorporation

-Owners: One or more shareholders who have one vote per share.

-Managers: Board of directors, and shareholders

-How is the Business started: Filling of an article of incorporation with state government.

-2 Advantages: 1. The capital is easy to obtain, 2. Decision making is shared.

-2 Disadvantages: 1. Double taxation, 2. More difficult to form.

-Limited or unlimited liability: Unlimited

-Source of investment: Purchase of stocks

-How is the ownership terminated: May have unlimited lifetime

- Ex: Lowe's and Improvement store

Proprietorship

-Owners- One person

-Who manages- May be owner

-How is the business started- 1. Begin buying and selling goods and services, 2. May vary by state

-2 advantages- 1. Easy to form, 2. One time taxation

-2 disadvantages- 1. Limited capital, 2. unlimited liability

-limited or unlimited- Unlimited

-Example- Answers may vary

-How is ownership terminated- Decision or life of owner

-Source of investment- Personal, gifts, borrowed, and others may vary

Partnership

-Owners- Two or more people

-Who manages- Determined by partnership agreement

-How is the business started- With a partnership agreement. Varies by state

-2 advantages- 1. Easy to form, 2. Work load shared

-2 disadvantages- 1. Profits shared, 2. Difficult to add partners

-Limited or Unlimited- Unlimited Depending on partnership type

-How is ownership terminated- Actions of partners, bankruptcy , death, and/ or court order

-Sources of investment- Personals of partner(s) gifts, borrowed and others may vary