Forms of Business Organization

Sole Proprietorship

A business in which one person is in control of manegment and profits.

Sole Proprietor

The single person at the head of a sole proprietorship.

Partnership

A voluntary association between 2 or more people who co-own a business for profit.

Articles of Partnership

The written agreement that creates the partnership.

Dissolution

The first stage in the termination of a partnership.

Winding Up

The seconf stage in the termination of a partnership.

General Partnership

A partnership in which the partners divivde profits and manegment responsibility and share unlimited personal liability for the partnership's debts.

Limited Partnership (LP)

A partnership consisting of at least one general partner and at least one limited partner in which the general partners assume all liablility for the partnership's debts, and the limited partners assume no liability beyond their originally invested capital.

Limited Liability Partnership (LLC)

A partnership in which all the partners assume liability for any partner's professional malpractice to the extent of the partnership's assets.

Corporation

A legal entity formed by issuing stock to investors, who are the owners of the corporation.

Shareholders

Investors in a corporation, who own the corporation.

S Corporation

A corporation that enjoys the tax status of a partnership.

Limited Liability Company

An unincorporated business that is taxed like a partnership, with the members paying personal income taxes, and has the limited liability of a corporation.

Cooperative

An orginization formed by individuals to market new products. Individuals in a cooperative pool their resources to gain an advantage in the market.

Franchise

A business arrangement between an owner of a trade name or trademark and the person who sells goods or services under the trade name or trademark.

Franchisor

The owner of the trademark or trade name in a franchise.

Franchisee

The seller of goods or services under the trade name or trademark in a franchise.

Chain-Style Business Operation

A type of franchise in which the franchise operates under the franshisor's business name and is required to follow the franchisor's standards and methods of business operation.

Distributorship

A type of franchise in which the franchisor manufactures a product and licenses a dealer to sell the product in an exclusve territory.

Manufacturing Arrangement

A type of franchise in which the franchisor provides the franchisee with a formula or necessary ingredient to manufacture a product.

Franchise Agreement

A contract whereby a company grants permission to another entity to use the franchisor's name, trademark, or copyright in the operation of a business and associated sale of goods in return for payment.

A natrually occuring form of business in the sense that if you started doing business without thinking about the form, you would be _____ _____.

Sole Proprietorship

Freedom to hire employees, determine business hours, and the ability to expand or change the nature of the business are all characteristics of a _____ _____.

Sole Proprietorship

2 disadvantages of a sole proprietorship include...

Personal liability for any losses or obligations the business has, and large start- up costs in relation to profits.

You and your bestfriend start a DVD store that you both share profits and control of the business equally. You have just formed a _____.

Partenrship

What are 3 advantages of a partnership?

The profits are taxed as individual income, and beacuse a written agreement isn't required in order to for the partnership, and you get to choose who you do business with.

"Each parter has personal liability for all losses, including those of the partner (in most cases)". This statement describes _____.

Partnership

If you and you business partner wish to terminate your partership, you must first complete this stage of termination.

Dissolution.

A limited partership is made up of 2 different types of partners, these parters are called _____ _____ and _____ _____.

General Partner and Limited Partner

If you and your friend start a reastraunt, and you assume all liabilty the restraunt encounters while your friend assumes no liability aside from their original investment, you are the _____ partner.

General

If you buy $800 worth of Google's shares, you are a _____.

Shareholder

If 4 billionaires pool their resources in order to market a product that will make you feel more energized, what speacialized form of of business have they created?

Cooperative

Joint Stock Company

A partnership agreement in which company members hold transferable shares whereas all the goods of the company are held in the names of the partners.

Business Trust

A business organization governed by a group of tustees, who operate the trust for beneficiaries.

Trustee

A person who operates a trust for beneficiaries in a business trust.

Beneficiary

A peron who can excpect to benefit from a relationship.

Syndicate

An investment group that comes together for the explicit purpose of financing a specific large project.

Joint Venture

An association between 2 or more parties wherein the parties share profits and management responsibilities with respect to a specific project.

McDonlad's allows you to operate a store under their trademarked name. This relationship is known as a _____.

Franchise

McDonlad's allows you to operate a store under their trademarked name. You are considered the _____ in this relationship.

Franchisee