Types of Business - CH. 22, SECTION 1

Types of Business - CH. 22, SECTION 1

Types of Business - CH. 22, SECTION 1

4 Elements of Business

  • Expenses
  • What you need to start & continue a business
  • Advertising
  • Introduction and reminder of your business
  • Receipts & Record Keeping
  • Needs to be accurate and dependable – for profits & losses
  • Risk (profit vs. loss)
  • Risk is a consequence to the advantage of being in business

Considerations When Starting a Business

  • Establishment of inventory
  • Use of computers/Technology
  • Turbo Tax
  • Time – the opportunity cost. You could be working for someone else.

3 Types of Businesses

  • Sole Proprietorship
  • Owned by 1 person
  • Easy & relatively inexpensive to start would be a need
  • Small businesses typically
  • Most common form of business
  • Owner receives all profits
  • Unlimited Liability

Advantages

Receive all profits

Quick decisions because no consultation

Relatively low taxes

Disadvantages

Unlimited liability

Handle all decisions

Time consuming

Rely on own funds

Business depends on one person

  • Partnership
  • Owned by 2 or more individuals
  • Articles of Partnership – Partners sign an agreement on what each is responsible for.
  • Limited Partnership - Partners are not equal
  • General Partner – majority of control
  • Limited Partner – own a small part – do not voice opinions & are responsible only for what they put in
  • LLPs (Limited Liability Partnerships) [mix of corporations and partnerships): Very popular with lawyers, accountants, and architects.
  • Joint Venture - temporary partnership to do a job

Advantages

Losses are shared

More efficient than proprietorships

Pay taxes on share of profit

Easier to borrow money

Disadvantages

Profits are shared

Unlimited liability, most of the time

Must reach agreements

Committed partners

  • Corporation
  • Owned by many
  • Started by a founder
  • Owned by Stockholders
  • Run by a Board of Directors
  • State government issues a charter to run the business
  • Complicated structure
  • Business has the same rights as an individual
  • Are Double Taxed
  • Founder’s responsibilities
  • Register with the state government for a charter
  • Sell Stock
  • Select the initial Board of Directors
  • Board of Director’s responsibility
  • Elected by Stockholders
  • Supervise & control the corporation
  • Make all major decisions

Advantages

Owners do not have to devote time to make money.

Stockholders have limited liability; they only lose what they put in.

Individuals trained in specific areas make decisions.

Disadvantages

Decisions are slow. Interest of the board may differ from the stockholders.

Double taxation. Govt. taxes corporate profit than individual shares.

Stockholders have little or no say in how business is run.

Stocks and Bonds

  • Stock: Individual ownership in a corporation. Shareholder receives voting rights and dividends.
  • Bond: Promise by a corporation to pay a stated amount of interest over a period of time.

Other Types of Businesses

  • Franchise – sell the name & structure of a business
  • Help train employees & set up the business
  • Franchisee – pays a start up fee & annual fee
  • Non – Profit – business does not run to make money
  • Cooperative – individual businesses that work together to benefit all members
  • Producer – Ex: Farmer’s Market
  • Consumer – Ex: PCC Natural Markets
  • Service – Ex: Credit Unions

Types of Business - CH. 22, SECTION 1

______

  • Expenses
  • What you need to start & continue a business
  • Advertising
  • ______
  • Receipts & Record Keeping
  • Needs to be accurate and dependable – for profits & losses
  • ______
  • ______is a consequence to the advantage of being in business

Considerations When Starting a Business

  • ______
  • Use of computers/Technology
  • Turbo Tax
  • Time – the opportunity cost. You could be working for someone else.

3 Types of Businesses

  • Sole Proprietorship
  • ______
  • Easy & relatively inexpensive to start would be a need
  • ______typically
  • Most common form of business
  • ______
  • Unlimited Liability

Advantages

______

Quick decisions because no consultation

Relatively ______

Disadvantages

______

Handle all decisions

______

Rely on own funds

______

  • Partnership
  • ______
  • Articles of Partnership – ______
  • ______- Partners are not equal
  • General Partner – ______
  • ______– own a small part – do not voice opinions & are responsible only for what they put in
  • LLPs (Limited Liability Partnerships) [mix of corporations and partnerships): Very popular with ______
  • ______

Advantages

______

More efficient than proprietorships

______

Easier to borrow money

Disadvantages

______

Unlimited liability, most of the time

Must reach agreements

______

  • Corporation
  • Owned by many
  • ______
  • ______
  • Run by a Board of Directors
  • State government issues a ______to run the business
  • Complicated structure
  • Business has the same rights as an ______
  • ______
  • Founder’s responsibilities
  • Register with the state government for a charter
  • ______
  • Select the initial ______
  • Board of Director’s responsibility
  • Elected by Stockholders
  • Supervise & control the corporation
  • ______

Advantages

Owners do not have to devote ______

Stockholders have limited liability; they only lose what they put in.

Individuals trained in ______make decisions.

Disadvantages

______. Interest of the board may differ from the stockholders.

______. Govt. taxes corporate profit than individual shares.

Stockholders have little or no say in how business is run.

Stocks and Bonds

  • Stock: ______. Shareholder receives voting rights and dividends.
  • ______: Promise by a corporation to pay a stated amount of interest over a period of time.

Other Types of Businesses

  • Franchise – ______
  • Help train employees & set up the business
  • ______– pays a start up fee & annual fee
  • ______– business does not run to make money
  • Cooperative – individual businesses that ______
  • ______– Ex: Farmer’s Market
  • Consumer – Ex: PCC Natural Markets
  • Service – Ex: ______

Types of Business - CH. 22, SECTION 1

4 Elements of Business

  • Expenses
  • What you need to start & continue a business
  • Advertising
  • Introduction and reminder of your business
  • Receipts & Record Keeping
  • Needs to be accurate and dependable – for profits & losses
  • Risk (profit vs. loss)
  • Risk is a consequence to the advantage of being in business

Considerations When Starting a Business

  • Establishment of inventory
  • Use of computers/Technology
  • Turbo Tax
  • Time – the opportunity cost. You could be working for someone else.

3 Types of Businesses

  • Sole Proprietorship
  • Owned by 1 person
  • Easy & relatively inexpensive to start would be a need
  • Small businesses typically
  • Most common form of business
  • Owner receives all profits
  • Unlimited Liability

Advantages

Receive all profits

Quick decisions because no consultation

Relatively low taxes

Disadvantages

Unlimited liability

Handle all decisions

Time consuming

Rely on own funds

Business depends on one person

  • Partnership
  • Owned by 2 or more individuals
  • Articles of Partnership – Partners sign an agreement on what each is responsible for.
  • Limited Partnership - Partners are not equal
  • General Partner – majority of control
  • Limited Partner – own a small part – do not voice opinions & are responsible only for what they put in
  • LLPs (Limited Liability Partnerships) [mix of corporations and partnerships): Very popular with lawyers, accountants, and architects.
  • Joint Venture - temporary partnership to do a job

Advantages

Losses are shared

More efficient than proprietorships

Pay taxes on share of profit

Easier to borrow money

Disadvantages

Profits are shared

Unlimited liability, most of the time

Must reach agreements

Committed partners

  • Corporation
  • Owned by many
  • Started by a founder
  • Owned by Stockholders
  • Run by a Board of Directors
  • State government issues a charter to run the business
  • Complicated structure
  • Business has the same rights as an individual
  • Are Double Taxed
  • Founder’s responsibilities
  • Register with the state government for a charter
  • Sell Stock
  • Select the initial Board of Directors
  • Board of Director’s responsibility
  • Elected by Stockholders
  • Supervise & control the corporation
  • Make all major decisions

Advantages

Owners do not have to devote time to make money.

Stockholders have limited liability; they only lose what they put in.

Individuals trained in specific areas make decisions.

Disadvantages

Decisions are slow. Interest of the board may differ from the stockholders.

Double taxation. Govt. taxes corporate profit than individual shares.

Stockholders have little or no say in how business is run.

Stocks and Bonds

  • Stock: Individual ownership in a corporation. Shareholder receives voting rights and dividends.
  • Bond: Promise by a corporation to pay a stated amount of interest over a period of time.

Other Types of Businesses

  • Franchise – sell the name & structure of a business
  • Help train employees & set up the business
  • Franchisee – pays a start up fee & annual fee
  • Non – Profit – business does not run to make money
  • Cooperative – individual businesses that work together to benefit all members
  • Producer – Ex: Farmer’s Market
  • Consumer – Ex: PCC Natural Markets
  • Service – Ex: Credit Unions
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