Download 5/10/17 PPT - Duplin County Schools

Draw and label the following:
demand curve, supply curve,
point of equilibrium, surplus
and shortage
FQ: 5/10/17
Types of US Businesses
Structures
Chapter 22 (Day 1)
Proprietorships
 A sole proprietorship, or proprietorship is a
business owned and operated by a single
person; it is the most common business type
Advantages
 The proprietor has pride in owning the
business and gets all the profits; they make
decisions quickly without having to consult a
boss; pay no corporate income tax
Proprietorships
Disadvantages
Proprietor has unlimited liability, or complete
legal responsibility for all debts and damages
arising from doing business
If the business has debt the owner’s personal assets,
such as houses, cars, and jewelry, may be seized to pay
the debts
Proprietorships
 It is also difficult for proprietors to raise financial
capital, the money needed to run a business
or enable it to grow larger
 Another disadvantage is attracting qualified
employees, many high school and college
graduates are more likely to be attracted to larger
firms
Partnerships
 A partnership is a business that two or more
people own
 The articles of partnership, identify how much
money each partner will contribute and what role
they will play in the business
 It clarifies how partners will share the profits or
losses and describes how to add or remove
partners, or break up the business
Partnerships
 The most common form of partnership is a
general partnership where all partners are
responsible for the management and
financial obligations
 In a limited partnership, at least one partner
is not active in the daily running of the
business, although they may have contributed
funds to finance the operation
Partnerships
Advantages
 Pride of sharing ownership in a business; there
are multiple owners so they can raise more
money
 If money cannot be borrowed, the partners can
take in new partners to provide funds;
partnerships also pay no corporate income tax
 Each owner can bring special talents to the
business; another advantage is the slightly larger
size which makes for more efficient operations
Partnerships
Disadvantages
 The legal structure is complex; when a partner is
added or removed, a new agreement has to be made
 The main disadvantage is the owners have unlimited
liability, each owner is fully responsible for all debts
of the partnership
Corporations
 The corporation is an organized business
recognized by law that has many of the rights and
responsibilities of an individual
 A corporation can do anything a person can doown property, pay taxes, sue or be sued- except
vote (1/5 of all businesses)
Corporations
 A charter is a government document granting
permission to organize; it includes the name,
purpose, address, and other features of the business
 It also specifies the amount of stock, or ownership
shares of the corporation, that will be issued
Corporations
 The people who buy this stock, the stockholders,
become part owners of the corporation; it uses
the money received from stock to run the
business
 Stockholders elect a board of directors to act on
their behalf; they hire managers to run the
corporation on a daily basis
Corporations
Advantages
 The first advantage is the ease of raising financial
capital, it if needs more money it can sell stock; it
is also easier to borrow large sums of money
 Raising large amounts of capital allows
corporations to grow to be huge; they employ
thousands of workers and carry out business
around the world
Corporations
 The board of directors can hire professional
managers to run the business; if they do not succeed
they can be replaced
 Ownership can easily be transferred by selling stock
and a corporation has limited liability only the
corporation is responsible for its debt
Corporations
Disadvantages
 They are expensive and complex to set up, owners have
very little say in the management of the business; they are
also under more regulation by the government
 Stockholders are subject to double taxation or paying taxes
twice on corporate profits; the corporation must pay a tax
and stockholders do as well
Other Business Organizations
 Some organizations operate on a “not-for-profit”
basis; examples include churches, hospitals, and
social service agencies
Other Business Organizations
 A cooperative is a voluntary association of people
formed to carry on an economic activity that
benefits members
 Consumer cooperatives buy bulk goods on behalf
of members, service cooperatives provide
services, producer cooperatives help promote or
sell products