Business Organizations

These flashcards cover key vocabulary and concepts related to business organizations.

Sole Proprietorship

A business owned by a single person, which accounts for 70 percent of U.S. businesses.

Sole Proprietorship | advantage

Easy to start/close, few rules, keeps all profits, full control

Sole Proprietorship | Disadvantages

Limited money, short life, unlimited liability (owner pays all debts)

Unlimited Liability

A situation where an owner is personally responsible for all debts of the business.

General Partnership

The most common type of partnership where partners share responsibilities and liabilities equally.

Limited Partnership

A partnership with at least one general partner who runs the business and is liable for debts, while limited partners have limited liabilities.

Limited Liability Partnership (LLP)

A partnership where all partners have limited liabilities and are not responsible for another partner's debts.

Partnership | Advantages

Easy to start, more money, shared decisions, specialization

Partnership | Disadvantages

Unlimited liability, possible conflicts, limited life (changes if partner leaves)

Corporation

A business entity where stockholders have rights to profits and limited liability.

Stockholder

An individual or organization that owns shares in a corporation and is entitled to a share of the profits.

Public Company

A corporation that issues stock which can be freely bought and sold.

Private Company

A corporation that controls who can buy or sell its stock.

Corporations | Advantages

Raise lots of money, limited liability, unlimited life

Corporations | Disadvantages

Hard to start, many regulations, double taxation, less control for founders

Horizontal Merger

A merger that joins companies with the same or similar products.

Vertical Merger

A merger that joins different steps of production or marketing.

Conglomerate

A corporation that combines companies with unrelated products.

Multinational Corporation

A business that has branches in several countries.

Franchise

A business that licenses the right to sell its products.

Franchisee

An individual or company that pays a fee to a parent company to sell its products in a specific area.

Franchises | Advantages

Independence, training, cheaper supplies, advertising support

Franchises | Disadvantages

Startup cost, share profits, limited control (must follow rules)

Nonprofit Organization

A business that operates for the benefit of society, often funded by donations.