Types of Business Organization KEY (How Businesses are Owned, p.384-385)

Type of Business Organization / (Sole) Proprietorship / Partnership / Corporation
Definition / A form of business
organization with one owner who takes all the risks and keeps all the profits. / A form of business
organization with two or more owners who share the risks and the profits. / A form of business
organization that is authorized by law to act as a legal entity regardless of the number of owners. Owners share the profits. Owner liability is limited to the amount of their investment.
Elaboration
(add some details from reading) / - owned by one person
- small business
- entrepreneur
- most common / - two or more people
share ownership
- agreement, contract
- usually small
Advantages / - you are your own
boss
- make all the decisions
- get all the profits / - share the risk
-both provide money,
ideas, talents, work / - little risk for each investor (stockholder)
-can grow large
- efficient
Disadvantages / - must supply all money
- work many hours
- owner takes all the
risk / - must be able to
work & get along
with your partner
- decisions are made
jointly / - takes a lot of
money to start
- stockholders are
not very involved
Examples
(name some real businesses that you know)
Illustration
(draw a picture or cartoon including words & symbols to show the main ideas of that type of business)

An ___entrepreneur______is a person who takes a risk in starting a business.

Which type of business would he or she most likely start? Proprietorship or partnership

Why?

Stock is a portion of ownership in a business. Stockholders give the corporation some of their own money because they expect that in the future the business will increase in value and earn a good profit. Then the stockholders receive dividends (a percentage of the profit) or they can sell the stock at a higher price than they originally paid and make a profit that way.

Think of a something that others may not value much right now, but you predict will increase in worth in the future. If you could buy stock in that, you would be an investor.

What is your idea for investing in?______

Why?

Vocabulary – Exclusions

One word or phrase in each group does not belong. Find the word and cross it out. Then write a sentence that tells how the other words are alike.

1. turns an idea into a product ______

takes risks

stocks ______

can succeed or fail

2. two or more people ______

have a contract

stockholders ______

share expenses and profits

3. one owner ______

most common business

shared risk ______

easy to start

4. low taxes ______

owned by stockholders

produces goods and services efficiently ______

hires others to work

Vocabulary –Matching

Match each term with the correct description.

_____ 1. corporation a. a business owned by one individual

_____ 2. nonprofit organization b. charities and cultural programs

_____ 3. partnership c. legal responsibility for something, costs or damages

_____ 4. sole proprietorship d. shares of ownership in a business

_____ 5. stocks e. business owned by two or more individuals

_____ 6. liability f. licensed by state governments & owned by shareholders

Identification -- Categorizing

Write the appropriate letter for the type of business in each scenario below.

S - sole proprietorship P - partnership C – corporation

_____ 1. Lindsey and Charlie own a driving school together called “The Right Turn.”

_____ 2. Mrs. Denson wins the lottery, and opens her own coffee shop.

_____ 3. Facebook is popular and gets a license from the state to sell Facebook stock.

_____ 4. Mr. Krabs is the owner of The Krusty Krab.

_____ 5. Napoleon likes tater tots, so he invests $50.00 to buy shares of Ore-Ida.

_____ 6. Tim Tebow, LeBron James, and Gabby Douglass open a sporting goods store together.