form of business organizations

Sole Proprietorship

Type of unincorporated business owned by a single person who is responsible for its liabilities and entitled to its profits (most common form of business in the US)

Unlimited Liability

The owner is personally and fully responsible for all losses and debts of the business

Limited Life

A firm that legally ceases to exist when the owner dies, quits, or sells the business

Partnership

Unincorporated business owned and operated by two or more people who share the profits and responsibility for debts (least common form of business organization in the US)

General Partnership

Form of partnership where all partners are equally responsible for management and debts

Limited Partnership

Form of partnership where one or more partners are not active in the daily running of the business, and whose liability for the partnership's debt is restricted to the amount invested in the business

Corporation

Form of business organization recognized by law as a separate legal entity having most of the rights of an individual

Incorporate

Corporation must file for permission from the national government or the state where the business will have its headquarters

Charter

Government document that gives permission to create a corporation (states name, address, purpose of business, and other features)

Stock

Certificate of ownership in a corporation

Stockholder

A person who owns stock in a corporation (shareholder)

Dividend

Check that transfers a portion of the company profits to stockholders usually quarterly (represents a portion of the corporate earnings)

Common Stock

Most frequently used form of corporate ownership, with one vote per share for stockholders

Preferred Stock

Form of corporate ownership without vote, in which stockholders get their investment back before common stockholders

Bond

A certificate that promises to repay the money loaned, plus interest, on a certain date

Principal

The amount borrowed or the amount still owed on a loan, separate from interest

Interest

Price paid for the use of another's money

Double Taxation

When stockholders are taxed once as corporate profit and again as personal income

Merger

Combination of two or more businesses to form a single firm

Income Statement

A report showing a business's sales, expenses, and profits for a certain period in order to illustrate the process

Net Income

Measure of business profits determined by subtracting all expenses, including taxes, from revenues

Depreciation

A non-cash charge the firm takes for the general wear and tear on its capital goods

Cash Flow

Total amount of new funds a business generates from operations (sum of net income and non-cash charges)

Horizontal Merger

The combination of two or more firms competing in the same market with the same good or service

Vertical Merger

When two companies involved in different steps of manufacturing or marketing join together

Conglomerate

Firm with four or more business making unrelated products, with no single business responsible for a majority of its sales

Diversification

Belief that if you do not put in all your effort, your overall sales and profits will be protected

Multinational

A corporation that has manufacturing or service operations in a number of different countries

Nonprofit Organization

Operates in a businesslike way to promote the collective interests of its members rather than to seek financial gain for its owners

Cooperative

A nonprofit (voluntary) association performing some kind of economic activity for the benefit of its members

Consumer

Voluntary association that buys bulk amounts of goods on behalf of its members

Credit Union

Financial organization that accepts deposits from, and makes loans to, employees of a particular company or government agency

Producer

Helps members promote or sell their products

Labor Unions

Organization of workers formed to represent its members' interests in variations employment matters

Collective Bargaining

Negotiations between representatives of labor unions and management to determine pay and acceptable working conditions

Professional Associations

Group of people in a specialized occupation that works to improve the working condition, skill levels, and public perceptions of the profession

Business Associations

Organized to promote their collective interests

Chamber of Commerce

Promotes the welfare of its members and of the community

Better Business Bureau

Non-profit organization sponsored by local businesses to provide general information on companies

Government Direct Role

Government supplies a good or service that competes with private businesses

Government Indirect Role

Government acts as an umpire to make sure the market economy operates smoothly and efficiently

Public Utilities

Investor or municipal owned companies that offer important products to the public