POBF 2.01 Types of Business ownership NAME

1.  Proprietorship: a business owned and by person. Typically managed by the .

Advantages:

a.  to start-up (form.)

b.  Owner/manager has of business.

c.  receives all

d.  One time means limited taxes

Disadvantages:

a.  Limited (money)

b.  Unlimited (responsible for debt)

c.  Limited to lifetime of (business formation dies with owner)

2.  A business owned and by or more people who have entered into a ; management of the company depends on the .

Advantages:

a.  More and available than a sole

b.  Combined resources ( , )

c.  Shared responsibilities

d.  Shared

e.  Work easier to than a sole proprietorship

Disadvantages:

a.  Shared

b.  Responsible for each others

c.  Potential for among partners

d.  Unlimited (depending on type.)

e.  Limited to lifetime of the partnership

3.  Limited Liability Partnership: identifies some who cannot lose more than the of their . are not allowed to participate in the day-to-day

4.  Types of Partnerships

a.  plays no role and is not known to the public.

b.  Plays an role and has unlimited (every partnership must have at least

c.  Participate as and have limited liability

d.  plays an active role but is from society.

e.  does not have an role but is known to the public.

Types of Partnerships
Type of Partner / Participation in Business / Relationship to the Public / Degree of Liability

5.  Corporations

a.  An organization by one or more and by a board of .

b.  Ownership

i.  Determined by

ii. A stockholder ( ) owns a “piece” of the company

iii.  Share of common stock equals one

Advantages:

c.  Easier to obtain ( )

d.  Limited for

e.  Life of the corporation is

Disadvantages:

a.  Double (profits and earnings)

b.  Increased regulations and legal restrictions

c.  Decision-making shared among , and .

6.  Specialized Corporations

a.  Subchapter S (S-corporation): treats as individuals by taxing them

b.  Limited Liability Company (LLC) – provides liability for owners

c.  Nonprofit corporation: a of people who join to do some activity that .

d.  Domestic: in a specific state

Examples located in NC: Bank of America, Lowe’s Home Improvement

e.  Foreign: chartered in one but doing business in another state

f.  Alien: chartered in another but doing business in a state

g.  Public: established for a purpose

Examples: National Science Foundation, Export-Import Bank of the US

h.  Private: established by individuals for or purposes

Examples: Enterprise Rent-A-Car, American Cancer Society

7.  Cooperatives

a.  Owned by , serves their needs and is managed in their interest.

b.  Purchase and cheaper as a group than as individuals

c.  Greater power than as individuals

8.  Franchise

a.  Permission to a business to sell products and services in a .

b.  Begins with a company who the product or service and grants the to another business

c.  Franchiser: the company that the product

d.  Franchisee: the company the right to run the business

9.  Types of Franchises

a.  Business format: requires to sell products or service in a

b.  Product trade name: allows to sell specific products. This format is usually formed by , and product.