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Starting a New Business
Or…how to be an Entrepreneur and make a lot of money!
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Why Support Business?
Meet consumer demand
Create jobs
Spur economic growth
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Sole Proprietorships
“Business owned and managed by one person. Owner makes the profit and is responsible for debts.
Advantages: Ease of start up and closing, few restrictions, full decision-making power and profits, individual taxation.
Disadvantages: Unlimited liability, limited growth potential, limited life.
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Businesses Organized as Partnerships Two or more owners own and operate a business
together. They share profits and liability.
Advantages: ease of start-up, few restrictions, shared decision-making power, specialization by partners, individual taxation, and increased growth potential
Disadvantages: unlimited liability, conflict between partners, keeping continuity if a partner leaves
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Businesses as Corporations
Business owned by shareholders who have limited liability in the firm’s debts. It is a legal entity that can conduct business affairs in its own name (14th Amendment)
Advantages: limited liability, greater growth potential, professional management, and long life
Disadvantages: complexity of start-up, loss of owner control, greater government regulation, tax on profits at the corporation and shareholder levels
*Multinational corporation operates in more than one country*Public vs. Private corporations…
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Franchises, Cooperatives, and Nonprofit OrganizationsBusiness Franchise: parent company (franchiser)
grants to independent owner (franchisee) exclusive right to use trade name and sell products in designated location.
Cooperative: business owned and operated by a group of individuals for shared benefit. Ex: credit unions, agricultural co-ops.
Nonprofit Organization: functions like a business, but no profit. Supports a particular private or public goal.
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Rights and Responsibilities of Business in Free Enterprise System?Many rights/responsibilities same as individuals
– ex., taxes, free speech
Ethics influences consumer decisions, i.e. Starbucks or Nike Ethical vs. Legal?
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Important Vocabulary
Sole proprietorship Liability Partnership Corporation Multinational corporation Business franchise Cooperative Nonprofit organization