Goals

1
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

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The Main Idea
This lessons introduces the major forms of
business ownership and outlines the strengths and
limitations of each
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What are some advantages and disadvantages of
owning your own business?
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Business Ownership

• It is the easier form of business to start and
  end.

Proprietorship Business owned and run by just one
person
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Graphic Organizer
Advantages of Sole Proprietorships
Easy to start
Proprietors are in charge
Proprietors keepall the profits
Taxes are lowerthan a corporations
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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
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Lemonade Stand Activity sole proprietorship
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Partnership

• Quite easy to start
• Partners both share investments and profits
• Each partner is liable for all the debts if it
  fails

Partnership A business owned and controlled by
two or more people
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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
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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
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Lemonade Stand Activity now form a partnership
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Corporation

• Owned by one or more shareholders
• Managed by a board of directors
• Not all owners have decision-making power
• Owners dont have access to profits unless the
  BOD approves!

Corporation Separate legal entity formed by
documents filed by the state
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Trivia time

• Hint 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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Graphic Organizer
Advantages of Corporations
Limited liability
Ability to raisemoney byselling stock
Business doesnot end when anowner dies
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Graphic Organizer
Disadvantages of Corporations
Double taxation
More governmentregulation
Difficult andcostly to start

1. Income is taxed.
2. Stockholders pay taxes on profits issued to them

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U.S. Sole Proprietorships, Partnerships, and
Corporations
Figure 6.1
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Partnership Agreement

• -Partnership Agreement Document (on my wiki)
• -What are some pros/cons of having a partnership?

Partnership Agreement Written agreement among
all owners
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Articles of Incorporation

• -Hop on an electronic devicesee if you can find
  PAs articles of incorporation document online.
• -PAs A.O.I
• -Does it look very difficult to fill out?

Articles of Incorporation Written legal documents
that defines ownership and operating procedures
and conditions for the business.
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Groups of 3Posters

• Specialized Partnerships and Corporations
• Poster-
• Business form with definition
• List of 3 advantages / 3 disadvantages of using
  this business form
• Example of this type of business
• Graphic illustration

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Franchise

• -Franchiser- The company that gives the right to
  use their name
• -Franchisee- Person purchasing the rights to run
  the business

Franchise A written contract granting permission
to operate a business in a set way.
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Franchise Activity

• On Wiki

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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?
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Answer Students might suggest that both
Jeremiahs and the little brothers 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.
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1. Define resources.

Resources are items people use to make or obtain
what they need or want. Examples of resources
include money, fuel, and labor.