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The World of Business

The World of Business. By April Anderson. Types of Businesses. Sole Proprietorship General Partnership Limited Partnership Limited Liability Partnership Corporation Nonprofit Corporation Limited Liability Company. Sole Proprietorship. Individual or married c ouple ownership

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The World of Business

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  1. The World of Business By April Anderson

  2. Types of Businesses • Sole Proprietorship • General Partnership • Limited Partnership • Limited Liability Partnership • Corporation • Nonprofit Corporation • Limited Liability Company

  3. Sole Proprietorship • Individual or married couple ownership • Low formation difficulty • Sole proprietor has unlimited liability • Relatively few legal requirements • Sole proprietor has full control of management • Not a taxable entity • Sole proprietor pays all federal taxes • Not required to register with the Washington Secretary of State

  4. General Partnership • Owned by two or more people • Partners have unlimited liability • Each partner has equal voice unless otherwise arranged • Low formation difficulty • Relatively few legal requirements • Not a taxable entity • Taxes based on business entity income • Not required to register with the Washington Secretary of State

  5. Limited Partnership • Low formation difficulty • At least one general partner has unlimited liability • Some formal legal requirements • Limited partners excluded from management • Files federal taxes as a separate entity • State taxes based on business entity income • Required to register with the Washington Secretary of State

  6. Limited Liability Partnership • Similar to a General Partnership • Medium formation difficulty • Partners aren’t typically liable for the debt of the LLP • Some formal legal requirements • All partners have the right to management • Files federal taxes as a separate entity • State taxes based on business entity income • Limited partners have liability up to their investment amount • Required to register with the Washington Secretary of State

  7. Corporation • Medium to high formation difficulty • Shareholders aren’t typically responsible for the debts of the corporation • Board of directors, annual meetings and annual reporting required • Managed by the directors • Federal taxes are taxed at the entity level. • Dividends are also taxed individually • State taxes based on business entity income • Required to register with the Washington Secretary of State

  8. Nonprofit Corporation • Legal entity used to further an ideal or goal • Not used as a means of profit • Serves the public interest • Exempt from many taxes • May also be required to register with the Charities Program of the Washington Secretary of State • Also may require more additional registration

  9. Limited Liability Company • Medium formation difficulty • Members aren’t typically liable for the debts of the LLC • Some formal requirements • Members have an operating agreement to outline management • No federal taxes at the entity level depending on the structure • State taxes based on business entity income • Responsible parties may have liability for trust fund taxes • Required to register with the Washington Secretary of State

  10. Planning Your BusinessQuestions to ask yourself: • What type of business would you like to open? • What types of activities will you be performing? • Where do you plan to start your business? • Where will your business be located? • What business structure will you have? • What do you plan to call your business? • How will you finance your business? • What are your expected costs?

  11. Emerald City Smoothie Created in 1996 First locations were in Washington Serve healthy, great-tasting smoothies Licensing rights were sold for about 26 locations Purchased by investors in 2005 Converted into a franchise Now 66 locations in the Western US and one in China

  12. Starting Your Own ECS • Complete the application form • Franchise team will review your qualifications. • Interview with corporate team. • Contracts, payments, and franchising agreement • Training provided by corporate. • Start your building!

  13. Opening A Store • Find a location for lease • Letter of Intent to the owner • (general guidelines of the business) • Negotiation Contract • i.e. who’s responsible, maintenance, etc. • Build Out • T.I. – tenant improvements (check from owner) The most difficult step is the build out - getting it completed in time and within the budget (John Madding)

  14. Sources: • www.emeraldcitysmoothie.com • www.dol.wa.gov/business • www.businessknowhow.com • John Madding, Owner, Emerald City Smoothie Kitsap

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