208d ago

Chapter 5 Proprietorships and Partnerships



Goals

  • Describe the characteristics of successful entrepreneurs. (5.1)

    • Some characteristics of successful entrepreneurs are that they are independent, creative, well experienced, and they are energetic. 

  • Discuss the responsibilities of owning your own business (5.1)

    • Some important responsibilities of owning your own business are getting a budget to start a business. The best method to get money is from advertising and marketing to increase profits quickly. 

  • Explain the advantages and disadvantages of proprietorships (5.2)

    • Some advantages of proprietorships are that the owner receives all profits and that they pay less income tax than corporations. 

  • Describe the types of businesses suited to being proprietorships (5.2)

    • The best types of businesses suited to being proprietorships are small-scale businesses for example, dentists, pool cleaners, mechanics. 

  • Explain advantages and disadvantages of partnerships (5.3)

    • Some advantages of partnerships is that the amount of capital is increased when starting a business, there is a less tax burden than proprietorships. Some disadvantages of a partnership is that the profit has to be split amongst a group of people and that there are limited sources of capital. 

  • Describe the types of businesses suited to the partnership form of business (5.3)

    • The businesses suited to partnerships are ones that require a lot of capital to start, for example, a clothing store, or a food store. 



Characteristics of Entrepreneurs

  • Self- starters

  • Energetic

  • Independent

  • Take-charge

  • Creative

  • Personable

  • Experienced

  • Well-informed 



Getting a Business Started

  • Business plan - a blueprint detailing all of the specifics relative to your business

  • Government support 

    • Small Business Administration (SBA)

  • Responsibilities of business ownership

    • Most of startup budget must come from advertising and marketing when you first open 

      • Amount will decrease over time

  • Intrapreneurs 



Elements of a Business Plan 

  • Nature of the business

    • Detailed description of products and/or services

    • Estimation of risk based on analysis of industry 

    • Size of business

    • Location of business

    • Background of entrepreneur(s)

  • Goals and Objectives

    • Basic results expected in short and long run 

    • Results expressed as sales volume or profits

  • Marketing Plan

    • Customers and demand for the product or service

    • Prices for the product or service

    • Comparison of product or service with competitors

  • Financial Plan 

    • Investment needed to start and maintain business

    • Projected income, expenses, and profit

    • Cash start-up and cash flow needs 

  • Organizational Plan 

    • Legal form of ownership

    • Legal factors: licenses, leases, contracts

    • Organization chart

    • Job descriptions and employee skills needed

    • Physical facilities: building, equipment, tools



Proprietorship

  • Proprietorship (aka sole proprietorship) - business owned and managed by one person, who furnishes expertise, money, and management and is entitled to all profits 



Advantages of Proprietorship

  • Owner is boss

  • Owner receives all profits

  • Owner personally knows employees and customers

  • Owner can act quickly in decision making

  • Owner is free from red tape

  • Owner usually pays less income tax than a corporation 

    • Tax rate 12-30%

      • More money = higher tax rate



Disadvantages of Proprietorship

  • Owner may lack necessary skills and abilities

  • Owner may lack funds

  • Owner bears all losses

  • Illness or death may close business ‘



Partnership

  • Partnership - business owned by two or more people

  • General partnership - each partner is personally liable for all debts incurred by partnership

  • Limited partnership - liability of each partner is restricted to amount of partner’s investment





Advantages of Partnerships

  • Skills and abilities pooled

  • Sources of capital increased

  • Credit position improved

  • Contribution of goodwill

  • Increased concern in business management

  • Lower tax burden than corporations

  • Reduction in competition

  • Retirement from management

  • Operating economies



Disadvantages of Partnerships

  • Unlimited financial liability

  • Disagreement among partners 

  • Each partner bound by contracts of others

  • Uncertain life

  • Limited sources of capital

  • Unsatisfactory division of profits

  • Difficulty in withdrawing from partnership 





8/20/2024 



Pg. 116

  1. They like to make sure others do most of the work

  2. All of the above 

  3. It gives out loans and grants to small businesses. 

  4. A large business would want to have an employee with entrepreneurial skills because they are experienced and have important skills to increase a businesses profit

Pg. 120 

  1. Owner deals with limited red tape 

  2. Owners may need to close the business in case of illness

  3. It keeps track of all the finances and shows the owner’s equity

  4. It is good because it gives the owners full control of their business and they pay less income tax than a corporation 

Pg. 128

  1. Partners have limited liability

  2. Reduce competition 

  3. Each partner is limited to the amount of partner’s investment

  4. They have many owner and want to share the profits


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Chapter 5 Proprietorships and Partnerships


Goals

  • Describe the characteristics of successful entrepreneurs. (5.1)

    • Some characteristics of successful entrepreneurs are that they are independent, creative, well experienced, and they are energetic. 

  • Discuss the responsibilities of owning your own business (5.1)

    • Some important responsibilities of owning your own business are getting a budget to start a business. The best method to get money is from advertising and marketing to increase profits quickly. 

  • Explain the advantages and disadvantages of proprietorships (5.2)

    • Some advantages of proprietorships are that the owner receives all profits and that they pay less income tax than corporations. 

  • Describe the types of businesses suited to being proprietorships (5.2)

    • The best types of businesses suited to being proprietorships are small-scale businesses for example, dentists, pool cleaners, mechanics. 

  • Explain advantages and disadvantages of partnerships (5.3)

    • Some advantages of partnerships is that the amount of capital is increased when starting a business, there is a less tax burden than proprietorships. Some disadvantages of a partnership is that the profit has to be split amongst a group of people and that there are limited sources of capital. 

  • Describe the types of businesses suited to the partnership form of business (5.3)

    • The businesses suited to partnerships are ones that require a lot of capital to start, for example, a clothing store, or a food store. 


Characteristics of Entrepreneurs

  • Self- starters

  • Energetic

  • Independent

  • Take-charge

  • Creative

  • Personable

  • Experienced

  • Well-informed 


Getting a Business Started

  • Business plan - a blueprint detailing all of the specifics relative to your business

  • Government support 

    • Small Business Administration (SBA)

  • Responsibilities of business ownership

    • Most of startup budget must come from advertising and marketing when you first open 

      • Amount will decrease over time

  • Intrapreneurs 


Elements of a Business Plan 

  • Nature of the business

    • Detailed description of products and/or services

    • Estimation of risk based on analysis of industry 

    • Size of business

    • Location of business

    • Background of entrepreneur(s)

  • Goals and Objectives

    • Basic results expected in short and long run 

    • Results expressed as sales volume or profits

  • Marketing Plan

    • Customers and demand for the product or service

    • Prices for the product or service

    • Comparison of product or service with competitors

  • Financial Plan 

    • Investment needed to start and maintain business

    • Projected income, expenses, and profit

    • Cash start-up and cash flow needs 

  • Organizational Plan 

    • Legal form of ownership

    • Legal factors: licenses, leases, contracts

    • Organization chart

    • Job descriptions and employee skills needed

    • Physical facilities: building, equipment, tools


Proprietorship

  • Proprietorship (aka sole proprietorship) - business owned and managed by one person, who furnishes expertise, money, and management and is entitled to all profits 


Advantages of Proprietorship

  • Owner is boss

  • Owner receives all profits

  • Owner personally knows employees and customers

  • Owner can act quickly in decision making

  • Owner is free from red tape

  • Owner usually pays less income tax than a corporation 

    • Tax rate 12-30%

      • More money = higher tax rate


Disadvantages of Proprietorship

  • Owner may lack necessary skills and abilities

  • Owner may lack funds

  • Owner bears all losses

  • Illness or death may close business ‘


Partnership

  • Partnership - business owned by two or more people

  • General partnership - each partner is personally liable for all debts incurred by partnership

  • Limited partnership - liability of each partner is restricted to amount of partner’s investment




Advantages of Partnerships

  • Skills and abilities pooled

  • Sources of capital increased

  • Credit position improved

  • Contribution of goodwill

  • Increased concern in business management

  • Lower tax burden than corporations

  • Reduction in competition

  • Retirement from management

  • Operating economies


Disadvantages of Partnerships

  • Unlimited financial liability

  • Disagreement among partners 

  • Each partner bound by contracts of others

  • Uncertain life

  • Limited sources of capital

  • Unsatisfactory division of profits

  • Difficulty in withdrawing from partnership 




8/20/2024 


Pg. 116

  1. They like to make sure others do most of the work

  2. All of the above 

  3. It gives out loans and grants to small businesses. 

  4. A large business would want to have an employee with entrepreneurial skills because they are experienced and have important skills to increase a businesses profit

Pg. 120 

  1. Owner deals with limited red tape 

  2. Owners may need to close the business in case of illness

  3. It keeps track of all the finances and shows the owner’s equity

  4. It is good because it gives the owners full control of their business and they pay less income tax than a corporation 

Pg. 128

  1. Partners have limited liability

  2. Reduce competition 

  3. Each partner is limited to the amount of partner’s investment

  4. They have many owner and want to share the profits