Business Business StructureStructure

By:By:Marc ReyburnMarc Reyburn

Four Types of BusinessesFour Types of Businesses• CooperativesCooperatives

• Corporations Corporations

• Single Single ProprietorshipsProprietorships

• PartnershipsPartnerships

Single ProprietorshipsSingle Proprietorships

Definition- is a company owned by Definition- is a company owned by one person who is the sole investor of one person who is the sole investor of capital into the company.capital into the company.

Most common type of business Most common type of business organization.organization.

Example: Small retail shops, local Example: Small retail shops, local service or repair shops; single service or repair shops; single practitioners such as doctors, lawyers. practitioners such as doctors, lawyers.

Single ProprietorshipsSingle ProprietorshipsAdvantagesAdvantages

• Tax Advantages• Owner is in direct control• Minimal working capital requirements• Not subject to a large amount of

government regulation• All profits go to the owner

Single ProprietorshipsSingle ProprietorshipsDisadvantagesDisadvantages

It is difficult to raise capital without It is difficult to raise capital without going deeply into debtgoing deeply into debt

There is complete or unlimited There is complete or unlimited financial liability on the part of the financial liability on the part of the owner in respect to the businessowner in respect to the business

Partnerships• Definition- is a company owned by

two or more individuals who each invest capital into the company.

• Partnership agreement• Example: Law firms, real estate

agencies, family owned businesses

PartnershipPartnershipAdvantagesAdvantages

Easy to formEasy to form The start up costs are lowThe start up costs are low There is only limited outside There is only limited outside

regulationregulation Tax advantagesTax advantages Additional sources of capital are Additional sources of capital are

availableavailable

PartnershipsPartnershipsDisadvantagesDisadvantages

There is complete or unlimited financial There is complete or unlimited financial liability on parts of the ownersliability on parts of the owners

Good Partners are hard to findGood Partners are hard to find It is difficult to raise large amounts of It is difficult to raise large amounts of

capital with only two ownerscapital with only two owners Partners may disagree, which results in Partners may disagree, which results in

confusion among employees and poor confusion among employees and poor management decisionsmanagement decisions

CorporationsCorporations Definition- is a separate legal entity Definition- is a separate legal entity

that is independent of its owners and that is independent of its owners and run by a board of directors. run by a board of directors.

Greatest volume of businessGreatest volume of business Example: Retain store chains, fast Example: Retain store chains, fast

food chains, manufacturing food chains, manufacturing companies, multinational companiescompanies, multinational companies

CorporationCorporationAdvantagesAdvantages

Easier to raise CapitalEasier to raise CapitalLegal Entity-Entitled to specific Legal Entity-Entitled to specific

priviledgespriviledgesOwnership can be transferred to other Ownership can be transferred to other

individualsindividualsTax advantagesTax advantagesLimited liabilityLimited liabilitySpecialized management improves Specialized management improves

efficiencyefficiency

CorporationCorporationDisadvantagesDisadvantages• Expensive to OrganizeExpensive to Organize• Closely regulatedClosely regulated• ““double taxed”double taxed”• Complicated management-less Complicated management-less

personal results in worker loyalty and personal results in worker loyalty and outputoutput

CooperativesCooperatives

Definition- a company that is Definition- a company that is owned and ran by the members.owned and ran by the members.

The members get a percentage The members get a percentage of the profits the company of the profits the company makes each year.makes each year.

Examples: Commodity Examples: Commodity producers, Farm supply producers, Farm supply companiescompanies

Cooperative Advantages Specialized management Easier to raise capital Legal entity-certain rights Substantial tax advantages Limited liability Antitrust and regulatory

exemptions

Cooperative Cooperative DisadvantagesDisadvantages

Incorporating statutes (regulations) Incorporating statutes (regulations) quite restrictivequite restrictive

Cooperation among members is often Cooperation among members is often difficult to achievedifficult to achieve

Slow to organize and difficult to get Slow to organize and difficult to get startedstarted

Members fail to recognize their Members fail to recognize their ownership responsibilitiesownership responsibilities

Other members of the business Other members of the business community resent coops.community resent coops.

ConclusionConclusion It’s about MoneyIt’s about Money And you have to And you have to

take care of take care of businessbusiness