introduction to business, business ownership and operations slide 1 of 69 types of business...
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Introduction to Business, Business Ownership and Operations Slide 1 of 69
Types of Business Ownership Types of Business Ownership The three different ways you can own a business are:
• Sole proprietorship• Partnership • Incorporation
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Sole Proprietorship Sole Proprietorship A sole proprietorship is a business owned by only one person.
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Sole Proprietorship Sole Proprietorship The advantages to having your own business are:
• It’s easy to start• You get to be your own boss • You get to keep all the profits• The taxes are usually low
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Sole Proprietorship Sole Proprietorship The disadvantages to having your own business are: • You have to pay for everything yourself• You might have to use your personal savings
or borrow money from the bank• You might lack business skills
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Sole Proprietorship Sole Proprietorship A serious disadvantage to owning a sole proprietorship is that you have unlimited liability, or full responsibility for your company’s debts.
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Partnership Partnership A partnership is a business owned by two or more persons who share the risks and rewards.
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Partnership Partnership
• Banks are often more willing to lend money to partnerships than sole proprietorships.
• Your partners can bring different skills to the business.
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Partnership Partnership The disadvantages to partnership are:• You not only share the risks with your partners, you
also share the profits. • You might not get along with your partners.• You share unlimited legal and financial liability with
your partners
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Graphic OrganizerGraphic OrganizerSimilarities and Differences BetweenSimilarities and Differences Between
Partnerships and Sole ProprietorshipsPartnerships and Sole Proprietorships
Increased diversity of experience
Shared losses
Combined
funds
BothBoth
Pride in owning and
running business
Easy to set up
Low taxes
Unlimited liability for debts
Huge time demands
Quicker decision making
Owner keeps all profits
Owner is own boss
Relatively easy to get credit
PartnershipsPartnerships Sole ProprietorshipsSole Proprietorships
Shared decision making
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Corporation Corporation A corporation is a business owned by many people but treated by law as one person.
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Introduction to Business, Business Ownership and Operations Slide 11 of 69
Corporation Corporation To raise money, you can sell stock, or shares of ownership in your corporation.
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Introduction to Business, Business Ownership and Operations Slide 12 of 69
Corporation Corporation For each share of common stock, the stockholder gets a share of the profits and a vote on how the business is run.
You also must have a board of directors who control the corporation.
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Corporation Corporation A major advantage of a corporation is its limited liability.
If your company loses money, the stockholders lose only what they invested.
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Corporation Corporation Another advantage is that the corporation doesn’t end if the owners sell their shares.
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Corporation Corporation A disadvantage of a corporation is that you often have to pay more taxes.
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Alternative Ways to Do Business Alternative Ways to Do Business Franchises, and nonprofit organizations offer you other ways to do business.
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Franchise Franchise A franchise is a contractual agreement to sell a company’s products or services in a designated geographic area.
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Franchise Franchise To run a franchise you have to invest money and pay the franchisor an annual fee or a share of the profits.
In return, the franchisor offers a well-known name and a business plan.
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Franchise Franchise You can operate a franchise yourself, as a sole proprietor, as a partnership with someone else, or even as a corporation.
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Introduction to Business, Business Ownership and Operations Slide 20 of 69
Franchise Franchise An advantage of opening a franchise is that it’s easy to start.
The name of the parent company can be a big draw for customers.
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Franchise Franchise The disadvantage of running a franchise is that the franchisor is often very strict about how the business is run.
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Nonprofit Organization Nonprofit Organization A nonprofit organization is a type of business that focuses on providing a service rather than making a profit.
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Nonprofit Organization Nonprofit Organization Like a corporation, a nonprofit organization has to register with the government and might be run by a board of directors.
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Nonprofit Organization Nonprofit Organization Because it doesn’t make a profit, a nonprofit organization doesn’t have to pay taxes.
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Nonprofit Organization Nonprofit Organization Donors don’t receive dividends like investors, but they can deduct their donations from their taxes.