miércoles, 10 de octubre de 2012

Forms of Business Ownership

Sole proprietorship
It is a business owned and operated by one person. The owner is responsible for all operation and assumes all the risk.


-         Owner makes all decisions
-         Owner is his own boss
-         All financial information can be kept secret
-         This type of business is easy to start and close.


-         Owner has responsibility for all debts
-         Unlimited personal liability: owner is responsible for paying all debts and liabilities
-         Cost and time commitment be high
-         Funding can be difficult to obtain
-         Owner does not have fringe benefits
-         Higher taxation rate than corporate rate


It is a form of business organization in which two or more people own and operate the business together.
-         Partner co-own the business
-         They share responsibilities
-         They may have greater financial resources than sole proprietors
-         They share business losses
-         They share time committed


-         Partner have unlimited personal liability for all the other partners:
o       Joint and several
§       Joint: all are responsible
§       Several: if one defaults, the other may have to pay
-         They may have conflicts
-         Profits are shared
-         Partnerships are more difficult to close down than sole proprietorships
o       Death, mental capacity, bankrupt, breach of partnership
-         Agents of the business can negotiate on behalf of other partners conducting business


It is a legal entity that exists independently of its owners.
-         Owners = shareholders
-         Articles of incorporation:
o       AGM: annual general meeting
§       Proxy voting
-         Owners paid:
o       Share value
o     Dividend: an amount pay to shareholders from company’s members

Pyramid of powers

-         Owners / shareholders: elect board of directors
o       Board of directors: hire officers
§       Officers: set corporate objective and select managers
·      Managers: supervise employees
o     Employees

Types of co-ops

Non - profit
Up to 50 shareholders
Unlimited shareholders
Owner by governments
Undertake fundraising
Shares are not offered to the public
Share are offered to general public
Provide a special service to the public
Do research
May only be a single person
Stock exchanges
Taxpayers may have to pay more taxes if business is not profitable
Help people


-         The shareholders have limited liability for the debts of the corporation and share the profits
o       A group is responsible for paying all the debts or liabilities. It is safer
-         Usually shareholders do not operate the company. They elect the board of directors, who hire officers
-         Corporations can usually raise funds more easily than sole proprietors or partners
-         Corporations usually have a lower tax rate than private owners
-         A corporation can continue to exist after death of its owners


-         Corporations have more complicated structures
-         Employees who are not owners may not be committed to the business
-         Corporations are soulless evil beast (maybe not, but profit is the higher motivation)
o       As good or bad as their shareholders want them to be
-         Government regulation
-         Corporation must publish annual reports, which could give away important secrets to competitors
-         The value of company shares can change depending on change in the stock


It is a business owned and operated by a group of people with a strong common interest.
-         Start up costs are shared among the members of the co-op
-         Members own and control the business and make all business decisions


-         Members own and control the business
-         Members share the start up costs and the running of the business
-         Members share the financial risk
-         Members may pay less for goods and service and get more for those they shell
o       Patronage returns


-         Because each member only has one vote, members may not want to invest money for expansion
-         Because of the number of members, making decisions can be difficult
-         Members may have conflicts
-         Individuals can only do business with other members within the co-op in area relates to the co-op


It is a business in which a franchisor sells to another person, called the franchisee, the rights to use the business name and to sell a product and service in a given territory.


-         Franchisees buy a business with a good reputation
-         Franchisors supply training and financial knowledge
-         Franchisors usually provide packaging, advertising and equipment to the franchisee


-         Franchises can be expensive to buy
-         Franchisees may have to follow a lot of rules laid down by the franchisors
-         If a franchisor’s business fails, so will fail the franchisee’s business