Business Ownerships

Cassidy Newman, second period, POBF, 2-17-16

Sole Proprietorship

One person owns, the manager may be the owner. The owner participates in all business activities.

The business is formed by buying and selling goods or services.

Advantages

  • easy to form
  • complete control of the business
Disadvantages

  • limited capital
  • unlimited liability
An example of a sole proprietorship would be a landscaping company.

Ownership is terminated by the decision or the life of the owner.

Sources of investment include: personal, gifts, and borrowing

Partnership

2 or more owners, management is determined by partnership agreement.

The business is formed with a partnership agreement.

Advantages


  • More capital and credit available
  • Work load is shared
Disadvantages



  • Profits are shared
  • Decisions are made jointly
Unlimited liability depending on partnership type


An example of a partnership is South Railroad Limited Partnership.

Ownership is terminated by actions of the partners, bankruptcy, death, and/or court order.

Sources of investment include: personals of partners, gifts, and borrowing.

Corporation

One or more shareholders (stockholders), who have one vote per share are the owners.

The managers are a board of directors and shareholders.

Business is formed by filing an article of incorporation with the state government.

Advantages

  • Capital is easy to obtain
  • Limited liability for shareholders
Disadvantages

  • Double taxation: profits and earnings
  • Government regulations

Limited liability for shareholders.

An example of a corporation is Bank of America Corporation.

Ownership is terminated by a decision by charter or article of dissolution, however it may have unlimited lifetime.

Sources of investment: the purchase of stocks.

Special Types of Ownerships

Cooperative

  • owned by members, serves their needs and is managed by their interests
  • purchase goods and services cheaper
  • greater bargaining power than individuals
  • Example: Land O'Lakes
Special Types of Corporations

  • Subchapter (S-corporation)-partners are individuals (taxed once)
  • Limited Liability Company-limited liability for owners
  • Non Profit Corporation-group of people join together to do an activity that benefits the public
  • Domestic-chartered in a specific state
  • Foreign- chartered in one state but doing business in another
  • Alien-chartered in another nation but doing business in a state
  • Public- established for a governmental purpose
  • Private-established by individuals for business or charitable purposes
Special Types of Partnerships

  • dormant- plays no role and is unknown to the public
  • general- plays an active role and has unlimited liability
  • limited- participate as investors and have limited liability
  • secret- plays an active role but are unknown to the public
  • silent- no active role but known to the public
Franchise

  • 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 ans grants the rights to another business
  • Types: Business Format & Product Trade Name
  • Example: Chick Fil A