Transcript Chapter 7 Power Point Presentation 7.1

PowerPoint Presentation

Section 7.1
 Pages 107-112
7.1
Types of Business Ownership
What you’ll learn
 The
pros and cons of forming
a sole proprietorship
 The advantages and
disadvantages of
partnerships
 The differences between
types of partnerships
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Types of Business Ownership
Why it’s important

The easiest businesses to
form are sole
proprietorships and
partnerships.
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Types of Business Ownership
Why it’s important

One should know the pros
and cons of sole
proprietorship and
partnership before choosing
either form of ownership.
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Types of Business Ownership
Key Terms
sole proprietorship
liability
unlimited liability
partnership
general partners
limited partners
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Types of Business Ownership
Springboard
Would you prefer to start
a business on your own,
with a partner, or with
several partners? Why?
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Types of Business Ownership
I. SOLE PROPRIETORSHIP
A.
B.
In a sole proprietorship, the
owner is the only one
responsible for business
activities.
Nearly 76% of all U.S.
businesses are sole
proprietorships.
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Types of Business Ownership
II. WHAT IS A SOLE
PROPRIETORSHIP?
A. The owner of a sole
proprietorship is the
only one who receives
the profits.
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Types of Business Ownership
B. A sole proprietor is
completely responsible
for liability, or money
owed to others.
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Types of Business Ownership
III. ADVANTAGES
A. Easy and inexpensive to
operate
B. Allows an owner complete
authority
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C. The least regulated form of
ownership
D. Taxed at the personal rate of
the owner
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IV. Disadvantages
A. The owner of a sole
proprietorship has
unlimited liability for all
debts and actions of the
business.
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Types of Business Ownership
B. Debts incurred may have
to be paid from the
owner’s personal assets.
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Types of Business Ownership
Critical Thinking
Given the disadvantages,
why do you think sole
proprietorships are so
popular?
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Types of Business Ownership
V. HOW TO SET UP A SOLE
PROPRIETORSHIP
A. File a DBA (for “doing
business as”).
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Types of Business Ownership
B. Request an Employer
Identification Number
(EIN) from the Internal
Revenue Service to track
federal income tax
withheld and federal
income tax returns.
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VI. PARTNERSHIPS
A. In a partnership, more
than one person shares
the business decisions and
outcomes.
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B. Partners who own a
business share the assets,
liabilities, and profits.
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VII. GENERAL VS.
LIMITED PARTNERS
A. General partners have
unlimited personal
liability and take full
responsibility for the
management of the
business.
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Types of Business Ownership
B. Limited partners’ liabilities
are limited to their
investment, and cannot be
actively involved in
running the business.
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VIII. OTHER TYPES OF
PARTNERSHIPS
A. A joint venture is a
type of partnership
where two companies
join to complete a
specific project.
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B. A strategic alliance is a
partnership in which two
businesses work together
for mutual benefit.
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IX. ADVANTAGES
A. Partnerships are
inexpensive to create.
B. Partnerships allow
partners complete control.
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C. Partnerships can share
ideas and secure
investment capital more
easily and in greater
amounts.
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Types of Business Ownership
X. DISADVANTAGES
A. It can be difficult to
dissolve one partner’s
interest in the business
without dissolving the
entire partnership.
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Types of Business Ownership
B. Personality conflicts can
result in breakups.
C. Partners can be held
liable for each other’s
actions.
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Types of Business Ownership
XI. MAKING A
PARTNERSHIP WORK
A. Share business
responsibilities.
B. Put things in writing.
C. Always be honest about how
the business is doing.
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Types of Business Ownership
End of Section 7.1