business chapter 6 Cartes

Sole Proprietorship

Partnership

Corporation

Franchise

Co-operative

what are the five main forms of ownership

A business owned and operated by one person. The owner and the business are legally the same entity.

def of sole Proprietorship

Advantages

Easy and inexpensive to start

Full control

Keep all profits

Less regulation

No special taxes

Disadvantages

Unlimited liability

Hard to raise money

Long hours and stress

Business ends if owner dies

advantages and disadvantages of sole Proprietorship

The owner is personally responsible for all debts.

If the business cannot pay its bills, the owner must pay from personal assets (house, car, savings).

what is Unlimited Liability

General Partnership Manages business, Unlimited liability

Limited Partner Invests money only, Liability limited to investment

what are Types of Partners

Advantages

Shared workload

More money available

Shared skills and ideas

Disadvantages

Disagreements

General partners have unlimited liability

Profits are shared

advantages and disadvantages of Partnership

A separate legal entity from its owners (shareholders).Limited

def Corporation

Owners are not personally responsible for business debts.

Limited Liability

Private Not traded on stock exchange, Max 50 shareholders

Public Shares sold on stock exchange, Unlimited shareholders

what are the Types of cooperation

Advantages

Limited liability

Easier to raise money

Perpetual life (continues if owner dies)

Easier to transfer ownership

Disadvantages

Expensive to set up

More regulations

More paperwork

Double taxation (corporate + personal)

Advantages Disadvantages Corporation

Refers to how corporations are directed and controlled to protect stakeholders.

Board members can be personally liable if misconduct occurs.

Corporate Governance

Vertical Merger Different stages ex Car maker + engine maker

Horizontal Merger Same industry, Car maker + truck maker

what is are the different types of Mergers

Unrelated industries, Car maker + finance company

Conglomerate

One buys another,Hostile takeover possible

Acquisition

A person (franchisee) buys the right to use a company's name and system from a franchisor. Depends on structure

Franchise def

Pay upfront fee

Pay monthly royalties

Follow strict rules

Buy from approved suppliers

Franchisee Must have

Advantages

Proven system

Brand recognition

Training and support

Lower risk than starting from scratch

Disadvantages

Less freedom

High fees

Must follow rules

Advantages and disadvantages of franchisee

Owned by members/customers, not investors.

Profits shared among members

No income tax

Created to increase members' economic power Limited

Co-Operative (Co-op) def

Consider:

Risk level

Need for money

Control desired

Number of owners

Long-term goals

How to Choose a Form of Ownership