1 / 42

OVERVIEW OF BUSINESS OWNERSHIP

OVERVIEW OF BUSINESS OWNERSHIP. Mr. Sherpinsky Council Rock School District. Business Video. Forms of Business Ownership. THREE BASIC FORMS OF BUSINESS OWNERSHIP. Sole proprietorship. Partnership. Corporation. SOLE PROPRIETORSHIP.

tamas
Télécharger la présentation

OVERVIEW OF BUSINESS OWNERSHIP

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. OVERVIEW OF BUSINESS OWNERSHIP Mr. Sherpinsky Council Rock School District

  2. Business Video Forms of Business Ownership

  3. THREE BASIC FORMS OF BUSINESS OWNERSHIP • Sole proprietorship • Partnership • Corporation

  4. SOLE PROPRIETORSHIP • A business owned and operated by one person. • Approximately 76 percent of all businesses in the U.S. are sole proprietorships.

  5. ADVANTAGES OF SOLE PROPRIETORSHIPS • Easy and inexpensive to create. • Owner makes all business decisions. • Owner receives all profits. • Least regulated form of business ownership. • Business itself pays no taxes.

  6. DISADVANTAGES OF SOLE PROPRIETORSHIPS • Owner has unlimited liability for all debts and actions of the business. • Unlimited liability: The debts of the business may be paid from the personal assets of the owner. • Difficult to raise capital. • Limited by his/her skills and abilities. • The death of the owner automatically dissolves the business.

  7. COMMON TYPES OF SOLE PROPRIETORSHIPS • Repair shops • Automotive • Lawn mower • Small retail stores • Tailors • Bicycle • Service organizations • Hair salons • Nail Salons • Food shops

  8. FICTITIOUS NAMES • A person who goes into business can choose to operate under his or her own name or can make up a name • Sole proprietor uses anything but his or her own name, the law calls the made-up name a fictitious name. • Must not be a name already in use

  9. CREATION AND OPERATION • Usually a few formal requirements to establish a sole proprietorship • May require: • Licenses to legally operate as business • Occupational licenses • Certain types of liability insurance • Some states require formal filing to begin operations or to use fictitious names

  10. Amira wants to start her own business. She really doesn’t like the idea of working for someone else—she wants work to suit her own schedule and she has very definite ideas about how a business should be run.

  11. Her idea is to open a slushee and fruit juice stand near the city park. However, she estimates the stand will cost about $7,500 to open and she has only saved $4,000.

  12. Given Amira’s circumstances, name one advantage Amira would find to having a sole proprietorship. Name one disadvantage.

  13. ANSWER Advantage—total control; disadvantage—limited capital.

  14. Review What You’ve Learned What is a sole proprietorship? A form of business that is owned and operated by one person How does a sole proprietorship begin? A person needs only to begin the operation of the business

  15. Review What You’ve Learned Name the advantages of a sole proprietorship? • Ease of creation • Total control • Retention of profits • Freedom from excessive governmental control • One-time taxation of profits

  16. Review What You’ve Learned Name the disadvantages of a sole proprietorship? • Limited capital • Unlimited liability • Limited human resources • Limited lifetime

  17. PARTNERSHIP A form of business ownership in which two or more people share the assets, liabilities, and profits.

  18. PARTNERSHIP LAW Largely found in the Uniform Partnership Act (UPA) The UPA defines partnership as “an association of two or more persons to carry on a business for profit.”

  19. TYPES OF PARTNERSHIPS • General partnership:A partnership in which all partners have unlimited personal liability and take full responsibility for the management of the business. • Limited partnership:A partnership in which the partners’ liability is limited to their investment. • Secret:Active, Unknown relationship, unlimited liability • Silent:Not Active, Known relationship, unlimited liability • Dormant:Not Active, unknown relationship, unlimited liability • Joint venture: A partnership in which two companies join to complete a specific project. The partnership ends after a specified period of time. • Strategic alliance: A partnership in which two businesses work together for mutual benefit.

  20. ADVANTAGES OF PARTNERSHIPS • Shared decision making and management responsibilities. • Easier to raise capital and greater credit • Few government regulations. • Business losses are shared by all partners.

  21. DISADVANTAGES OF PARTNERSHIPS • Partnerships may lead to disagreements. • Some entrepreneurs are not willing to share responsibilities and profits. • Some entrepreneurs fear being held legally liable for the error of their partners. • Each owner has unlimited liability. • Death dissolves partnership

  22. FORMING A GENERAL PARTNERSHIP • Need two or more parties • Combine their money, labor, and skills • Purpose of carrying on a lawful business

  23. FORMING A GENERAL PARTNERSHIP • Can be formed in one of three ways: • By agreement • Express agreement drawn up by partners • (Articles of Partnership: Describe important points) • By proof of existence • Method of doing business • (prima facie evidence: Forms regardless of the label) • By estoppel • Third party led to believe partnership exists • No true partnership created (Not real)

  24. FORMING A GENERAL PARTNERSHIP • Statute of Frauds: Requirements • Under the Statue of Frauds, if a partnership is to last more than a year or if the partnership is formed to sell, buy, or lease real property, it must be evidenced in writing. • Dissolving a Partnership • Legal detachment: change in the relationship when partner stops being associated with business • Doesn’t necessarily bring end to business

  25. DISSOLVING A PARTNERSHIP • Effects of Dissolution • Other partners may wish to continue • If so, new agreement needed • Public notice given to relieve retiring partners from liability for any new debts • Distribution of Assets • Paid in this order: • Money owed to creditors • Money lent to partners to the firm • Original money paid by partners • Surplus owed to partner

  26. PARTNERSHIP PROPERTY • Limitations • Important to distinguish between property of partnership and individual partners. • Property contributed to partnership becomes partnership property • Property Rights of the Partners • Certain rights exist: • Right to use/control the property • Right to manage the firm • Right to share in profits

  27. PARTNERSHIP DUITES • Partners must trust one another • Each partner is an agent of the other partner and has duties comparable to those of an agent • These duties: • Always act in good faith and in the best interest of the firm • Always use their best skill and judgment in looking after the firm’s affairs • To be loyal to the firm and put the firm’s interests first

  28. QUIZBLOG

  29. CORPORATION A business that is chartered by a state and legally operates apart from its owners. Is an entity of its own with all rights of a person.

  30. TYPES OF CORPORATIONS • C-corporation: The most common form of corporation. It protects the entrepreneur from being personally sued for the actions and debts of the corporation. • Subchapter S corporation: A corporation that is taxed like a sole proprietorship or partnership. • Nonprofit corporation: Legal entities that make money for reasons other than the owner’s profit. • Limited Liability Company (LLC): A new form of business ownership that provides limited liability and tax advantages.

  31. ADVANTAGES OF CORPORATIONS • Can raise money by issuing shares of stock. • Offers owners limited liability. Limited liability: Owners are liable only up to the amount of their investments. • People can easily enter or leave the business by buying or selling their shares of stock. • The business can hire experts to professionally manage each aspect of the business.

  32. DISADVANTAGES OF CORPORATIONS • Legal assistance is needed to start a corporation. • Start-up is costly. • Corporations are subject to more government regulations than partnerships or sole proprietorships. • A lot of paperwork is involved in running a corporation. • Income is taxed twice.

  33. Alternate approaches to starting a business • Buy an existing business. • Enter a family business. • Own a franchise business.

  34. ADVANTAGES OF BUYING AN EXISTING BUSINESS • Existing businesses already have customers, suppliers, and procedures. • Seller of the business may be willing to train the new owner. • There are existing financial records. • Financial arrangements may be easier.

  35. DISADVANTAGES OF BUYING AN EXISTING BUSINESS • Business may be for sale because it is not making a profit. • Problems may be inherited with the purchase of an existing business. • Many entrepreneurs may not have the capital needed to purchase an existing business.

  36. ADVANTAGES TO ENTERING A FAMILY BUSINESS • There is a certain sense of pride and accomplishment that comes from being part of a family endeavor. • A business can remain in the family for generations. • Some people enjoy working with relatives. • The efforts of running a family business give one the benefit of knowing that their efforts are helping those whom they care about.

  37. DISADVANTAGES TO ENTERING A FAMILY BUSINESS • Senior management positions are often held by family members who may not be the best qualified. • It may be difficult to retain qualified employees who are not members of the family. • Family politics may affect decisions regarding the business. • It is often difficult to separate business life and private life in family-run businesses. • It is often difficult to set policies and procedures and to make decisions.

  38. OWN A FRANCHISE BUSINESS Franchise: A legal agreement that gives an individual the right to market a company’s products or services in a particular area. Franchisee: A person who purchases a franchise agreement. Franchisor: The person or company who sells a franchise. Initial franchise fee: The fee the franchise owner pays in return for the right to run the business.

  39. ADVANTAGES OF PURCHASING A FRANCHISE BUSINESS • An established product or service is being provided. • Franchisors often offer management, technical, and other assistance. • Equipment and supplies may be less expensive. • A guarantee of consistency attracts customers.

  40. DISADVANTAGES OF PURCHASING A FRANCHISE BUSINESS • The cost of franchises may be high, which can reduce profits. • Franchise owners are limited in the decisions they can make regarding the business. • The performance of other franchises impact on the franchisee. • The franchise agreement may be terminated by the franchisor.

  41. CORPORATION QUICK FACTS TO KNOW • Paying the filing fee for the application is the last thing to do to complete the process to form a corporation. • Individuals who own the corporation are called shareowners or stockholders. • Developing and filing the articles for incorporation are a required document for forming corporations and completing an application for incorporation.

  42. CORPORATION QUICK FACTS TO KNOW • Promoters are the people charged with carrying out the incorporation process. • Corporations formed in Texas and operating in Pennsylvania would be considered foreign. • Corporation formed in Mexico and operating in the United States would be considered alien corporations. • Articles of incorporation are submitted to the Secretary of State for each state.

More Related