Presentation Transcript

1. Types of Businesses

2. Good vs. Service What is the difference between a good and a service?
3. Types of Business Ownership There are three main types of businesses: Sole proprietorships Partnerships Corporations *entrepreneurs must decide which type best fits their situation* *during the life of a business, its form can change* These changes often occur when a business is growing
4. Sole proprietorships Partnerships Corporations Franchise Non-Profit
5. Sole Proprietorships A Sole Proprietorship is a business owned by one person About 75% of all businesses in the U.S. are sole proprietorships
6. Sole Proprietorships Advantages It is easy to do Might need only a license or a permit to start They are in charge of their own business They can make all the decisions and run the companies as they see fit They can keep all of the profits Their income taxes are lower than a corporation’s Corporations pay taxes on the income they receive Then a corporation’s stockholders pay taxes on the income they receive as dividends on stocks A sole proprietor is only taxed on their personal tax rate, which is often lower than the corporate tax rate
7. Sole Proprietorships – Unlimited Liability Disadvantages Unlimited Liability, which means the owner is responsible for the company’s debts If the owner has more debt than income received, the owner has to make up the difference Limited access to credit If the owner doesn’t have much experience or money saved, lenders will be reluctant to offer credit Many sole proprietorships fail because they run out of money The person in charge may not have all of the skills needed to run the business The owner may know everything about the skills needed for the service, but nothing about record keeping The company ends when the owner dies
8. Partnerships A Partnership is a business owned by two or more people who share its risks and rewards To start a partnership, you need a Partnership Agreement, which is a contract that outlines the rights and responsibilities of each partner
9. Partnerships Advantages It is easy to do Might need only a license or a permit to start It is easier for partnerships to obtain capital Each partner usually contributes money to start the business Banks are often more willing to lend money to partnerships than to sole proprietorships Not dependent on a sole person The income of a partnership is taxed only once Each partner brings difference skills and talents to the business
10. Partnerships Disadvantages All of the partners share the business risks Problems occur when partners do not get along or one of them decides to leave The other owners must end the partnership and reorganize the business since the original partnership no longer exists Partners share unlimited legal and financial liability If one partner makes a bad decision, all partners are responsible
11. Corporations A Corporation is a company that is registered by a state and operates apart from its owners To form a corporation, the owners must get a corporate charter from the state where their main office will be located A corporate charter is a license to run a corporation To raise money, the owners can sell stock, or shares in the company The company must have a boards of directors, who will govern the corporation
12. Corporations Advantages Limited Liability, which holds a firm’s owners responsible for no more than the capital that they have invested in it The ability to raise money when people buy stock The corporation does not end if an owner dies The deceased owner’s shares are sold, and the business continues
13. Corporations Disadvantages Corporations pay taxes on their income, and stockholders pay taxes on profits issued to them, which is called Double Taxation The government regulates corporations more than other types of businesses Corporations are difficult and costly to start

14. NIKE?

15. S Corporations S Corporations are special corporations that do not have double taxation They do have other restrictions
16. Other Ways to Organize a Business Cooperative Nonprofit Organization Franchise
17. Cooperative A Cooperative is an organization owned and operated by its members Groups of businesses, such as small farms, pool their resources and form a cooperative The purpose is to save money on the purchase of certain goods and services A cooperative can make marketing of goods and services more efficient and profitable Juice maker Ocean Spray is a cooperative of cranberry growers
18. Nonprofit Organization A Nonprofit Organization, or nonprofit, is a type of organization that focuses on providing a service, but not to make a “profit” Nonprofits must also register with the government Because they do not make a “profit”, they do not pay taxes
19. Franchise A Franchise is a contractual agreement to use the name and sell the products or services of a company in a designated geographic area Two common franchises are Taco Bell and Merry Maids To run a franchise, you have to invest money and pay franchise fees or a share of the profits In return, the franchiser offers a well-known name and business plan

20. Churches?

21. Review

22. With a partner: Identify TEN businesses and determine which type of business structure they fall into. Create a PowerPoint Presentation showing the ten businesses your chose and the type of business they are.