goals understand the three major forms of business ownership determine when each form of business...
TRANSCRIPT
Goals
Understand the three major forms of business ownership
Determine when each form of business ownership is most appropriate
Recognize other specialized business ownership forms
The Main Idea
This lessons introduces the major forms of business ownership and outlines the strengths and limitations of each
What are some advantages and disadvantages of owning your own business?
Business Ownership
*It is the easier form of business to start and end.
ProprietorshipBusiness owned and run by just one person
Graphic Organizer
Advantages of Sole Proprietorships
Easy to startProprietors are
in charge
Proprietors keepall the profits
Taxes are lowerthan a corporation’s
Graphic Organizer
Disadvantages of Sole Proprietorships
Limited accessto credit
Many run outof money
The owner may not have the necessary skills
The business endswhen the owner dies
Lemonade Stand Activity
Partnership
• Quite easy to start
• Partners both share investments and profits
• Each partner is liable for all the debts if it fails
PartnershipA business owned and controlled by two or more people
Graphic Organizer
Advantages of Partnerships
Easy to start
Easier toobtain capital
Easier toobtain credit
Not dependent on a sole person
Only taxed once
Diversity in skills
Graphic Organizer
Disadvantages of Partnerships
Business risk is shared
Unlimited legal and financial
liability is shared
If one partner makes a mistake, all partners are
responsible
Corporation • Owned by one or more
shareholders
• Managed by a board of directors
• Not all owners have decision-making power
• Owner’s don’t have access to profits unless the BOD
approves!
Corporation Separate legal entity formed by documents filed by the state
Trivia timeHint #1 They named their first daughter Lisa
Hint #2 They were fired from their own corporation in 1985 only to be rehired in 1996?
Hint # 3
How can you get fired from your own business!?!?!?
He even hired all the people on the board!!
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Advantages of Corporations
Limited liabilityAbility to raise
money byselling stock
Business doesnot end when an
owner dies
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Disadvantages of Corporations
Double taxationMore government
regulationDifficult and
costly to start
1. Income is taxed.2. Stockholders pay taxes
on profits issued to them
U.S. Sole Proprietorships, Partnerships, and Corporations
Figure 6.1
Partnership Agreement
-Partnership Agreement Document (on my wiki)
-What are some pros/cons of having a partnership?
Partnership Agreement Written agreement among all owners
Articles of Incorporation
-Hop on an electronic device…see if you can find PA’s articles of incorporation document online.
-PA’s A.O.I
-Does it look very difficult to fill out?
Articles of IncorporationWritten legal documents that defines ownership and operating procedures and conditions for the business.
Groups of 3…Posters
Specialized Partnerships and Corporations
Poster-– Term with definition
– List of advantages/disadvantages
– Examples
– Graphic illustration
Franchise-Franchiser- The company that gives the right to use their name
-Franchisee- Person purchasing the rights to run the business
FranchiseA written contract granting permission to operate a business in a set way.
You and your friend, Jeremiah, were helping your little brother figure out how to make molded cars from melted crayons using a kit you gave him. You decide to sell the cars at a local toy shop. Jeremiah wants to be a partner in your business.
Decision Making Since Jeremiah was involved in the initial experiment, do you have an obligation to make him a partner? What about your little brother?
Answer
Students might suggest that both Jeremiah’s and the little brother’s input into the process of making the cars should be rewarded in some way, especially if their ideas result in sales and profits. Having partners can help an entrepreneur launch and grow a business. However, disagreement among partners can sometimes present significant roadblocks to success.
2. Define resources.
Resources are items people use to make or obtain what they need or want. Examples of resources include money, fuel, and labor.