Chapter 5: Forms of Business Ownership



Forms of Business Ownership Names      

 

• A SOLE PROPRIETORSHIP is a business that is owned, and usually managed, by one person; it is the most common form.

• A PARTNERSHIP is a legal form of business with two or more owners.

• A CORPORATION is a legal entity with authority to act and have liability separate from its owners.

• A FRANCHISE AGREEMENT is an arrangement whereby someone with a good idea for a business (the FRANCHISOR) sells the rights to use the business name and to sell a product or service (the FRANCHISE) to others (the FRANCHISEE) in a given territory.

• A COOPERATIVE is a business owned and controlled by the people who use it—producers, consumers, or workers with similar needs who pool their resources for mutual gain.

• A LIMITED-LIABILITY COMPANY (LLC) is a company similar to an S corporation but without the special eligibility requirements.

In Groups of 2, assign the below advantages/disadvantages to the forms of business ownership above AND list an example for each from Troy.

ABILITY TO BECOME A LARGE SIZED COMPANY.

BEING YOUR OWN BOSS. 

COATTAIL EFFECTS FROM OTHER LIKE BUSINESSES.

COMPLEMENTARY KNOWLEDGE.

DIFFICULTY OF TERMINATION.

DISAGREEMENTS AMONG PARTNERS.

DIVISION OF PROFITS.

DOUBLE TAXATION.

EASE OF DRAWING TALENTED EMPLOYEES. 

EASE OF OWNERSHIP CHANGE. 

EASE OF STARTING AND ENDING THE BUSINESS.

EXTENSIVE PAPERWORK.

FEW FRINGE BENEFITS. 

FINANCIAL ADVICE AND ASSISTANCE.

FLEXIBLE DISTRIBUTION OF PROFITS AND LOSSES. 

FLEXIBLE OWNERSHIP RULES. 

INITIAL COST.

LARGE START-UP COSTS.

LEAVING A LEGACY 

LIMITED FINANCIAL RESOURCES.

LIMITED GROWTH.

LIMITED LIABILITY.

LIMITED LIFE SPAN. 

LONGER SURVIVAL.

LOWER FAILURE RATE.

MANAGEMENT AND MARKETING ASSISTANCE

MANAGEMENT DIFFICULTIES. 

MANAGEMENT REGULATION.

MORE ECONOMIC BUYING POWER 

MORE FINANCIAL RESOURCES. 

MORE MONEY FOR INVESTMENT.

NATIONALLY RECOGNIZED NAME.

NO SPECIAL TAXES. 

OPERATING FLEXIBILITY. 

OVERWHELMING TIME COMMITMENT. 

PERPETUAL LIFE

POSSIBLE CONFLICT WITH SHAREHOLDERS AND BOARD OF DIRECTORS. 

PRIDE OF OWNERSHIP.

RESTRICTIONS ON SELLING.

RETENTION OF COMPANY PROFITS.

SEPARATION OF OWNERSHIP FROM MANAGEMENT

SHARED MANAGEMENT AND POOLED RESOURCES

SHARED ROYALTIES

TWO TAX RETURNS. 

UNLIMITED LIABILITY. 

                          

 

 

1. Sole Proprietorship

Example     

Pros?      

Cons?      

2. Partnership

Example     

Pros?      

Cons?      

3. Corporation

Example     

Pros?      

Cons?      

4. Cooperative

Example     

Pros?      

Cons?      

5. Franchise

Example     

Pros?      

Cons?      

6. Not-for-Profit

Example     

Pros?      

Cons?      

7. LLC

Example     

Pros?      

Cons     

................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download