types of business ownership
DESCRIPTION
Intro to Business. Types of Ownership BEC 10TRANSCRIPT
BUSINESS FUNDAMENTALSTypes of Business Ownership
TYPES OF BUSINESS OWNERSHIP
Who is your boss?Who is your boss’s boss?
Can you become part owner?
Forms of business ownership and type of business help describe how the business is organized and run.
4 TYPES OF OWNERSHIP
1. Sole Proprietorship2. Partnership3. Corporation4. Co-operative
1. SOLE PROPRIETORSHIP
Owned by one person, who performs most roles and owns everything
Owner gets all profits, takes all the losses → called unlimited liability
Easiest and least expensive to set up Easiest for tax purposes → income recorded
under personal income
1. SOLE PROPRIETORSHIPADVANTAGES
owner makes all the decisions- hours of business, whom to hire
they are their own boss any profits belong to the owner
1. SOLE PROPRIETORSHIPDISADVANTAGES
the owner may lack the ability to buy the right supplies, do accounting etc
it the business loses money, so does the owner
creditors can claim the personal belongings of the owner
long hours if the owner is ill the business doesn’t
open
2. PARTNERSHIPS
Two or more individuals share costs and responsibilities
Terms of partnership recorded in partnership agreement
“silent” partners- partners that usually will front a lot of capital, but do not want to participate in business decisions – receive profits in return
2. PARTNERSHIPS
Two types of Partnerships can exist in a business: General partnership
All partners have unlimited liability (can be held responsible for the other partner’s business related debts)
Limited partnership Partners have limited liability (only
responsible for their share)
2. PARTNERSHIPSADVANTAGES two or more people share decision
making process one person may be better at one task
than the other partner sometimes easier to borrow money if
two people are involved
2. PARTNERSHIPSDISADVANTAGES share profits partners could disagree friendships can be lost over time as a
result
3. CORPORATION
Business with a legal status Can be as small as one person, or
multinational Some owned by individuals, families,
small groups
3. CORPORATION
Ownership often broken into small units, shares, which are sold through a stock exchange
(ie. TSX) → a publicly traded corporation
Those who buy: shareholders
3. CORPORATIONS
Since there are many owners, a board of directors runs corp.
Shareholders have limited liability, not responsible for debts
Get profits as dividends
3. CORPORATION TYPES
1. Private Corporation Only a few people control stock Not publicly traded
2. Public Corporation Sell shares to raise money 1 share = 1 vote;
those with most shares influence company decisions (usually orig. owner, execs)
3. Crown Corporation Business owned by the federal or provincial government Federal: VIA Rail, Canada Post, Bank of Canada Provincial: BC Transit, BC Lottery, BC Hydro, BC Museum
4. COOPERATIVES
Business owned by workers/those who use it
Run by board of directors Each member only gets 1 vote Profits shared based on use
Examples: Peninsula Co-op, Mountain Equipment Coop
(MEC)
FRANCHISE
A franchisor licenses the rights to the business to a franchisee for a fee
Franchisee runs business according to agreement Franchisee also pays monthly fee, has to purchase
product through franchiser, sometimes gets trained by franchiser, has to maintain uniform quality etc.
Examples: Tim Hortons, McDonalds, M&M Meats, Boston Pizza, UPS Store