Business Ownerships
Cassidy Newman, second period, POBF, 2-17-16
Sole Proprietorship
The business is formed by buying and selling goods or services.
Advantages
- easy to form
- complete control of the business
- limited capital
- unlimited liability
Ownership is terminated by the decision or the life of the owner.
Sources of investment include: personal, gifts, and borrowing
Sole Proprietorship Example #1
Sole Proprietorship Example #2
Partnership
The business is formed with a partnership agreement.
Advantages
- More capital and credit available
- Work load is shared
- Profits are shared
- Decisions are made jointly
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.
Partnership Example #1
Partnership Example #2
Corporation
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
- 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.
Corporation Example #1
Corporation Example #2
Special Types of Ownerships
- 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
- 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
- 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
- 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