Transcript Types of Business Ownership

Types of
Business
Ownership
By Jaclyn Brown
6/4/2013
Hancock County School
District
Standard/Element
 BMA-IBT-7:
Demonstrate an understanding
of entrepreneurship through recognizing a
business opportunity, how to start a
business based on the recognized
opportunity, and basics of how of
operate and maintain that business.
 7.6: Differentiate between the types of
business ownership.
Types of business ownership
Sole
Proprietorship
Partnership
Franchise
Corporation
Sole proprietorship
A
business owned by only one person
Advantages
1. Complete control
2. Sole decision maker
3. No corporate tax
payments
4. Minimal legal costs
5. Few formal business
requirements
Disadvantages
1. Personally liable for all
debt
2. Assumes all risks of
business
3. Business decisions rely
solely on you
4. Investors are slow to
invest
Partnership
A
business owned by two or more people who share
its risks and rewards
Advantages
1. Easy to format
2. Diverse skills ad
expertise
3. Large resources
4. Flexibility of operations
5. Sharing of risks
6. Benefits of unlimited
liability
7. Promptness in decision
making
Disadvantages
1.
2.
3.
4.
5.
6.
Limited capital
Unlimited liability
Instability
Risk of implied authority
Lack of harmony
Non-transferability of
interest
7. Lack of public
confidence
Corporation
 Company
that is registered by a state and operates
apart from its owners.
Advantages
Disadvantages
1. Shareholders have
limited responsibility
2. Can obtain more
capital through sale of
actions
3. Can deduct the cost
of benefits offered to
employees
1. Requires more time to
integrate
2. Supervised and
subject to rules of
entities
3. Payment of more taxes
Franchise

Contractual agreement to use the name and sell the products
and services of a company in a designated geographic area.
Advantages
1. Owning an established
business
2. A known brand
3. Simpler business
financing
4. Business relationships
5. Support and security
6. Less likely to fail
Disadvantages
1.
2.
3.
4.
5.
Having no control
Ties to suppliers
Risks from others
Franchise costs
Cut of your profit
Matching
Student should
complete worksheet
on Matching Activity
Other useful terms to know
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Unlimited liability: a liability that holds the owner fully
responsible for a company’s debts
Limited liability: A claim that holds a firm's owners
responsible for no more than the capital that they have
invested in it.
Cooperative: Organization that is owned and operated by
its members.
Nonprofit organization: A type of business that focuses on
providing a service rather than making a profit.
Sole: having no sharer; being the only one
Income: A gain or recurrent benefit usually measured in
money that derives from capital or labor.
Regulate: to bring under control of law or constituted
authority