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Three Forms of Business Ownership

Mr. Friend 7 th Grade Class Southern Middle School. Three Forms of Business Ownership. Three Forms of Business Ownership. Proprietorship Partnership Corporation. Characteristics of a Sole Proprietorship. Business owned and ran by ONE PERSON. Of all three forms, most popular in US

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Three Forms of Business Ownership

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  1. Mr. Friend 7th Grade Class Southern Middle School Three Forms of Business Ownership

  2. Three Forms of Business Ownership • Proprietorship • Partnership • Corporation

  3. Characteristics of a Sole Proprietorship • Business owned and ran by ONE PERSON. • Of all three forms, most popular in US • Also, it is the easiest to start • Just need to get simple government license and/or permits. • Some people start as hobby or interest

  4. Advantages of a Sole Proprietorship • Easy to start • Owner gets to make all decisions • Owner receives all profits made • Not a lot of government regulations

  5. Disadvantages of a Sole Proprietorship • Owner is responsible for all debts. • If business fails, owner is personally responsible. • Most time, they lose everything. • The business remains with the life of the owner.

  6. Characteristics of a Partnership • Business owned by TWO OR MORE PEOPLE who have entered into a partnership agreement • Both owners responsible for key decisions of business

  7. Advantages of a Partnership • Easy to form • Two or more people contribute to investment to start business • More expertise/knowledge on how to run business

  8. Disadvantages of a Partnership • Each partner is responsible for decisions made by all other partners • If someone makes bad decision, you are stuck with it • No protection for personal money of any partner • If partner decides to leave or dies, partnership is dissolved.

  9. Characteristics of a Corporation • Separate legal entity formed by documents filed with a state. • Entity-separate from others • Owned by one or more shareholders • Purchase shares of stock • Numerous legal requirements must be met to form • Most popular form of ownership for large businesses

  10. Advantages of a Corporation • Treated as “individuals” by government • Business easily expanded • Ownership changed by sale of stock • Easy to change

  11. Disadvantages of a Corporation • Most difficult to form (legal requirements) • Decision-making shared among managers, board of directors, and shareholders (too many opinions) • Many records kept because operation laws

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