Download - Business organizations
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BUSINESS
ORGANIZATIONS
CHAP T ER 3
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TYPES OF BUSINESS ORGANIZATIONS
Sole Proprietorships Partnerships Corporations
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SOLE PROPRIETORSHIPS A business owned and run by one person
Easy to start Just need to pay business licenses and
fees
Example:Opening up yourown restaurant
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SOLE PROPRIETORSHIP: ADVANTAGES
Easy to start and manage Easy to leave business Don’t have to share
profits No separate taxes Personal satisfaction
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SOLE PROPRIETORSHIP: DISADVANTAGES
Unlimited liability Hard to get funding Difficult to be efficient
and profitable Hard to find talented
employees Limited lifetime of business
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PARTNERSHIPS
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PARTNERSHIPS A business jointly owned by two or
more persons Types of partnerships
General partnershipLimited partnership
Easy to startPartners decide how to divide losses and profits
They’re starting a fishing business.
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PARTNERSHIPS: ADVANTAGES Easy to start Partners bring in different skills No separate taxes Easier to get funding/
loan Easier to be run
efficiently
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PARTNERSHIPS: DISADVANTAGES
Responsible for all partners’ actions Conflicts between
partners Liability if company fails Limited life of business
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CORPORATIONS
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CORPORATIONS A corporation is a business organization
recognized by law as a separate entity having the rights of an individual
To form a corporation: Government CharterStocksInvestors
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CORPORATIONS: ADVANTAGES
Easier to get a loan Professional managers can run it Limited liability for owner(s) Unlimited life of the
business
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CORPORATIONS: DISADVANTAGES
Hard to get charter Owners don’t have full
control on day-to-day operations
Double taxation Government regulations
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BUSINESS GROWTH AND EXPANSION
Reinvestment Growth Through Mergers
Types of Mergers Horizontal mergers Vertical mergers Conglomerates Multinational