Intro to Business, 7eIntro to Business, 7e

© 2009 South-Western, Cengage Learning SLIDE 1

Forms of Business Forms of Business OwnershipOwnership

GoalsUnderstand the three major forms of business

ownership.Determine when each form of business

ownership is most appropriate.Recognize other specialized business

ownership forms.

5-25-2

Intro to Business, 7eIntro to Business, 7e

© 2009 South-Western, Cengage Learning SLIDE

Chapter 5

2

BUSINESS OWNERSHIPBUSINESS OWNERSHIP

ProprietorshipPartnershipCorporation

Intro to Business, 7eIntro to Business, 7e

© 2009 South-Western, Cengage Learning SLIDE

Sole ProprietorshipSole Proprietorship

Sole Proprietorship: one ownerAdvantages: easy to create/dissolve;

inexpensive to create; business pays no taxes; least regulated

Disadvantages: unlimited liability; limited to the owner’s abilities and skills

Intro to Business, 7eIntro to Business, 7e

© 2009 South-Western, Cengage Learning SLIDE

PartnershipPartnershipMore than one person own a business and

share the assets, liabilities, and profits.General vs Limited Partnership

General: all have unlimited liability and responsibility Limited: limited to partners investments

Joint Venture: partnership two companies joint to complete a specific projects; set period of time; dissolves after completion of project/time

Intro to Business, 7eIntro to Business, 7e

© 2009 South-Western, Cengage Learning SLIDE

Partnership (Continued)Partnership (Continued)

Advantages: inexpensive to create; partners have control; more capital (money); more ideas/creativity

Disadvantages: difficult to dissolve one partner’s interest; personality conflicts; bound by laws of agency (liable for each other’s actions)

Intro to Business, 7eIntro to Business, 7e

© 2009 South-Western, Cengage Learning SLIDE

CorporationCorporation

A business chartered (registered) by a stateAdvantages:

raise capital by selling stock limited liability create pensions and retirement for employees

Disadvantages: expensive to set up income heavily taxes

Intro to Business, 7eIntro to Business, 7e

© 2009 South-Western, Cengage Learning SLIDE

Types of CorporationsTypes of Corporations

C-Corporation (most common; taxed on profits and when distributed to shareholders)

Subchapter S Corporatin (no double taxation)Nonprofit Corporation (legal entities that make

money for reasons other than the owners’ profit)Limited Liability Corporation (limited personal

liability; taxed only once)

Intro to Business, 7eIntro to Business, 7e

© 2009 South-Western, Cengage Learning SLIDE

Chapter 5

8

Forms of OwnershipForms of Ownership

Source: Internal Revenue Service

Intro to Business, 7eIntro to Business, 7e

© 2009 South-Western, Cengage Learning SLIDE

Chapter 5

9

CHOOSING A FORM OF CHOOSING A FORM OF BUSINESS OWNERSHIPBUSINESS OWNERSHIP

Choosing a proprietorshipChoosing a partnershipChoosing a corporation

Intro to Business, 7eIntro to Business, 7e

© 2009 South-Western, Cengage Learning SLIDE

Chapter 5

10

OTHER FORMS OTHER FORMS OF OWNERSHIPOF OWNERSHIP

Specialized partnerships and corporations limited liability partnership joint venture

Cooperatives and franchisesS-corporation limited liability companies (LLC)nonprofit corporations.

Intro to Business, 7eIntro to Business, 7e

© 2009 South-Western, Cengage Learning SLIDE

Chapter 5

11