Corporations:Corporations:• Stockholders

– People who own stock of the corporation• Stock/Share

– Represents a portion of ownership; anyone who owns stock of a corporation is therefore a part owner of that corporation

• 20% of US businesses are corporations, which are responsible for up to 90% of all goods sold in the nation and generate about 70% of net national income earned

• Closely Held vs Publicly held– Privately held corporations which stock is only available to a close net

of people (family); stock is not sold on the open market– Publicly traded stock available to all interested in investing with the

corporation; stock can be bought and sold on the open market• Bond

– Certificate issued by a corporation of promise to repay with interest amount borrowed from investor

• Dividends– Portion of corporate profits paid out to stockholders

Mergers and Mergers and Acquisitions:Acquisitions:

• Corporate growth based on

– Vertical Integration

– Horizontal Integration

What are the main business What are the main business structures utilized in the US?structures utilized in the US?

• Sole Proprietorship – Business owned and managed by a single individual

• Partnerships– Business organization owned by two or more persons with specific

divisions as to responsibilities and profit• Corporations

– A legal entity owned by individual stockholders who share limited liability for firm’s debts

• Franchises– A semi-independent business that pays fees to a parent company in

exchange for exclusive right to sell a certain product• Cooperatives

– Business organization owned and operated by a group of individuals for their shared benefit

• Nonprofit – Businesses that aim to benefit the society

Responsibility vs LiabilityResponsibility vs Liability

• Responsibility – refers to the actions and tasks of doing what

has to be done to operate the business

• Liability – refers to the legal accountability one may face

for product/service, which may result in monetary fines or criminal charges

Sole ProprietorshipSole Proprietorship • 75% of all businesses in US are sole proprietorships• the oldest, most common, and simplest form of business

organization • can be organized very informally, is not subject to much federal or

state regulation, and is relatively simple to manage and control • owner is inseparable from the business and is financially and legally

responsible for all debts and legal actions against the business

PartnershipsPartnerships

• General Partnership– Most common– Partners share equal responsibility and liability– Exp: doctors, lawyers, accountants

• Limited Partnership (LP)– One partner is required to be a general partner with

unlimited personal liability– Remaining partners contribute finances

• Limited liability Partnership (LLP)– Responsibilities and liability is shared among

partners