5-2 FORMS OF BUSINESS OWNERSHIP

SLIDE 1

DO NOW?

Are you interested in owning your own business?

Why?/Why Not?

Ownership structure video

https://www.youtube.com/watch?v=CBYbgA3PxeA

Proprietorship

A proprietorship is a business owned and run by just one person.

It is the easiest form of business to start and end.

The owner is also responsible for all debts of the business. If the business fails, the owner has almost no shelter from creditors.

More than half of all new businesses fail each year.

SLIDE 4

PartnershipSLIDE 5

A partnership is a business owned and controlled by two or more people who have entered into a partnership agreement.

It is very similar to the proprietorship in several ways. It is quite easy to start.

The owners are both responsible for key business decisions and functions.

The partners share both investments and profits based on the terms of the partnership agreement.

Each partner is liable for all of the debts of the business should it fail.

Corporation

SLIDE 6

A corporation is a separate legal entity formed by documents (Articles of Incorporation) filed with a state.

It is owned by one or more shareholders and managed by a board of directors.

Bylaws are created and used as operating instructions for the corporation

Owners invest in the business by purchasing shares of stock. Corporations are more difficult to form than either

proprietorships or partnerships. They must also meet more legal requirements. Not all owners

have direct involvement in decision-making about business functions. They will not have access to profits unless the board of directors approves it.

Corporations protect the liability of stockholders to only the amount of money they have invested.

Forms of Ownership

U.S. Business Comparison by Form of Ownership

Form of Ownership

Number of Businesses

(2006)

Total Revenue (Thousands)

Percent of All Businesses

Percent of Total Revenue

Proprietorship 22,075,000 1,278,000,000 71.53% 4.06%

Corporation 5,841,000 26,070,000,000 18.93% 82.82%

Partnership 2,947,000 4,131,000,000 9.55% 13.12%

Total 30,863,000 31,479,000,000 100.00% 100.00%

SLIDE 7

Advantages/Disadvantages

Franchise

A franchise is a written contract granting permission to operate a business to sell products and services in a set way.

The company that owns the product or service and grants the rights to another business is known as the franchiser.

Activity

With a partner (up to 3 in a group) identify and develop profiles of businesses in the local community (i.e. Wanaque/Ringwood/Haskell) that are representative of each of the four types of business organizations discussed.

Using Microsoft Word create a profile including the following information: name of business, type of business ownership, number of employees, sales in 2013 (if available) location (city/street name), how long they have been in business. Each business must be on a separate sheet. Print and hang on the red wall.

Each group must create four profiles.