Course

Essential Standard Objective Essential Questions

Understand the nature of business. 2.01 B2 5% Understand the types of business ownership. x What are the types of business ownership? x What are the characteristics of the different types of business ownership? UNPACKED CONTENT

6200/6600 Principles Unit A of Business and Finance 2.00 B2 24%

Principles of Business

I. Main Types of Business Ownership Table Type Sole Proprietorship Partnership Owner(s) One person Two or more people

Manager(s)

May be owner

Formation

Advantages

Disadvantages

Begin buying and selling goods or services, plus may vary by states 1. Easy to form 2. Complete control of business 3. Recipient of 100% of the profit 4. One time taxation 1. Limited capital 2. Unlimited liability 3. Limited lifetime of owner

Determined by partnership agreement Vary by states

Corporation One or more shareholders, who has one vote per share Managers, board of directors, and shareholders Filing of an article of incorporation with state government 1. Capital easy to obtain 2. Limited liability for shareholders 3. Possibility unlimited lifetime 1. Double taxation: profits and earnings 2. Government regulations 3. Operations controlled by shareholders and board of directors instead of original owner(s)

1. More capital and credit available than a sole proprietorship 2. Work load shared 3. Losses shared 1. Profits shared 2. Decisions made jointly 3. Unlimited liability depending on partnership type

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Type Liabilities

Examples of liabilities

Termination

Source(s) of investment

Examples of business ownership

Corporation 1. Employment 2. Accidents and injuries on premises 3. Company vehiclerelated 4. Product-related 5. Errors and omissions 6. Directors and officers 1. Employment: Manager fires an employee that missed significant days from work. 2. Accidents and injuries on premises: Customer breaks a leg while on business property. 3. Accidents and injuries on premises: Driver runs into a building while driving companys car. 4. Product-related: Toddlers are easily injured by a sharp edge of a toy. 5. Errors and omissions: Employee accidentally damages a customers property. 6. Directors and officers: One food ingredient that may cause cancer is intentionally omitted from package. Decision or life of Actions of the Determined by charter owner partners, or unlimited lifetime bankruptcy, death, and/or court order Personal, gifts, Personals of Purchase of stocks borrowed, and others partner(s), gifts, may vary borrowed, and others may vary Answers will vary. x South Railroad x Bank of America Limited Partnership Corporation x Eden Limited x Lowes Home Partnership Improvement Store

Sole Proprietorship 1. Employment 2. Accidents and injuries on premises 3. Company vehiclerelated 4. Product-related 5. Errors and omissions

Partnership 1. Employment 2. Accidents and injuries on premises 3. Company vehiclerelated 4. Product-related 5. Errors and omissions

II. Other types of business ownership A. Specialized partnership Limited liability partnership B. Types of partnerships 1. Dormant partner 2. General partner 3. Secret partner 4. Silent partner

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C. Specialized corporations 1. Subchapter/S-corporation 2. Limited liability company 3. Nonprofit corporation D. Types of corporations 1. Domestic Example: SAS Institute, Inc. 2. Foreign Example: 1-800-flowers.com 3. Alien Example: Toshiba 4. Public 5. Private E. Cooperatives F. Franchise formats 1. Business-format franchise 2. Product trade-name franchise

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