Chapter 5Business Organization

Forms of Business Ownership

• Proprietorship• Partnership– Limited Liability

Partnership– Joint Venture

• Franchise

• Corporation– S-corporation– Limited Liability Company– Non-profit Corporation

Proprietorship

• A business owned and run by just one person.

• Easiest to start• Few legal requirements

Partnership• A business owned and controlled by two or

more people who have entered into a written agreement.

• Easy to start• Share investments and profits• Share debt and business failure

Limited Liability Partnership

• A partnership where an investor cannot lose more than they have invested

• No allowed to participate in day-to-day management

• Difficult and costly

Joint Venture• A unique business organized by two or more

other businesses to operate for a limited time for a specific project

Corporation• A separate entity formed by documents filed

with the state.• Owned by one or more share holders• Managed by a board of directors• Owners invest in the business by purchasing

shares of stock• Most legal requirements

Corporation

S-corporation• Offers limited liability of a corporation• All investment is passed through owners based

on their investment

Limited Liability Company• Liability protection for owners• Simpler set of organizing and operating

requirements than a corporation

Non-Profit Corporation• A group of people that join to do some activity

that benefits the public.• Raising funds, take donations, etc.• Government approval

Franchise• A written contract granting

permission to operate a business to sell products and services in a set way.

• Company grants rights to a franchisee

Examples

Jimmy John’s

Tippitoesdance.com