[PP3] Module 1: Forms of Organization

1. Proprietorship

2. Partnership

3. Corporation

Forms of Business Organization

Proprietorship

- A business owned by one person

- Individual is liable

Partnership

-Is a voluntary association of two or more persons to act as co-owners of a business for profit

-No legal limit on # of partners but must have at least 2

-Less common that Sole prop. or corp.

Corporation

- A business owned by stockholders who share in its profits but are not personally responsible for its debts

- liable only for the amount fo their investments

trade name filing fees

In proprietorship, the cost of starting a business starts from _____________

partnership agreement, legal costs, trade name filing fees

In partnership, the cost of starting a business starts from _____________

statue, articles of incorporation, filing fees, taxes, fees for states in which corporation registers to do business

In corporation, the cost of starting a business is created by _____________

investment

In corporation, owners are liable only for the amount fo their _____________

T

T/F. Corporation is a company authorized to act as a single entity (legally a person) and recognized as such in law.

1. business termination

2. partnership termination, unless stipulated otherwise

3. no impact

Death of owner / withdrawal:

1. Proprietorship - _____________

2. Partnership - _____________

3. Corporation - _____________

1. has right to sell/transfer

2. cannot sell without refusal from partners

3. may transfer their shares without consent from others

Transfer assets:

1. Proprietorship - ____________

2. Partnership - _____________

3. Corporation - _____________

1. loans or personal contributions

2. loans from banks (may require change in partnership agreement)

3. stock may be sold as voting or nonvoting

Capital:

1. Proprietorship - ____________

2. Partnership - _____________

3. Corporation - _____________

Corporation

What business organization has the maximum personal tax advantage

Corporation

What business organization has the best potential benefits for employees

- Associated professional

- Mergers and Acquisitions

- Team endeavors

- One Person Corporation

- Limited Liability Company/Partnership (LLC/LLP)

Other forms of organization:

1. Functional Structure

2. Market-based Structure

3. Geographical Structure

4. Matrix Structure

5. Flat Organization

Departmental/Functional Internal Organization

Functional Structure

By skill set and function (ex. marketing, sales, services, etc.)

- Pros: they can focus their energy on executing their role

- Con: lack of interdepartmental communication

Market-based Structure

By typology/market (ex. commercial, residential, etc.)

- pros: each operates as its own company controlling its resources.

- con: lack of communication

Geographical Structure

By operation/venue (ex. North American, EMEA, Asia-Specific, etc.)

Matrix Structure

Hybrid, blend of functional and the projectized organization.

pros: can share knowledge across functional divisions

cons: reporting to multiple managers may add confusion and conflict

Flat organization

Studio-based, one with an organizational structure with few or no levels of middle management between

Business plan

A written document that describes the nature of a business and how it will operate

Professional Associations

Groups for professionals (like doctors, lawyers, or architects) that help members with networking, standards, and legal/business support.

Mergers and Acquisitions (M&A)

When two companies combine (merger) or one buys another (acquisition). The business may change or keep the same structure.

Team Endeavors

A group of people or companies working together on a project or business goal, like a joint venture or cooperative business.

One Person Corporation (OPC)

A business owned by just one person but treated like a corporation, meaning their personal assets are protected from business debts.

Limited Liability Company (LLC)

A mix of a corporation and a partnership, where owners get liability protection but more flexibility.

Limited Liability Partnership (LLP)

Provide limited liability to their owners, but mainly for professionals like lawyers and accountants, where each partner is protected from the mistakes of others.