FrontPage: Find your used scantron at the front.

The Last Word: Guided Reading due Friday

A Polish truck driver needed to move four vehicles to Belgium. As you can see, he devised an ingenious solution. He almost made it, but spoilsport police in the town

of Krefeld, Germany stopped him.

Business Organizations

Chapter 8

Section 1Starting a Business

Getting Started• People who decide to start a business and

are willing to take risks are entrepreneurs.– Collect information about the business, the

factors of production for the product, and learn about taxes and laws relating to the business.

• Federal and state government offer help to small businesses.

• The Internet has a great deal of information to help entrepreneurs.

Elements of Business Operation• Expenses: wages, equipment, utility bills,

rent, supplies, and inventory• Advertising: information about your

company and the service/product you are selling

• Record Keeping: track all your expenses and income

• Risk: balancing the risk against the advantages of being self-employed

Section 2Sole Proprietorships and Partnerships

Sole Proprietorships• A business owned by one person, known as the

proprietor.– The biggest advantage is that the owner receives

all the profits and has full control of the business.– The biggest disadvantage is that the owner has

unlimited liability, which means the owner is personally responsible for all debts and damages from doing business.• Personal assets may be seized to pay off business

debts.

Partnerships• A business owned and operated by two or

more people.– Partners sign a legally binding agreement

describing the duties of each partner, division of profits and distribution of assets at end of partnership.

• The biggest advantage is that the partners share control and profits.

• The biggest disadvantage is the partners have unlimited liability.

Limited Partnerships• Limited partnerships are businesses in

which the partners are not equal.• The general partner(s) is(are) fully

responsible for debts of company.– Other partners contribute money or property,

but have no voice in the company’s management.

– The limited partners have no liability beyond their initial investment.

Partnerships – Joint Ventures

• Joint ventures are temporary partnerships set up for a specific purpose.

• The joint venture is dissolved after it has accomplished its goal.

Section 3The Corporate World and Franchises

Why Form a Corporation?• The need for financial capital

• Wanting financial backers who will lend funds without having a hand in the business.

What is a Corporation?• An organization owned by many people but

treated by law as if it were a person.

• Corporations can own property, pay taxes, make contracts, sue and be sued.

• Corporations have a existence which is distinct from stockholders.

What is a Corporation?• A major advantage is stockholders have

limited liability, they are not personally responsible, only the business loses money and assets.

• A major disadvantage is corporations pay more taxes than other forms of business organizations.

Corporate Structure• Register the corporation in the state where

it will headquartered.

• File the articles of incorporation – Includes

• Name, address and purpose of corporation; • Names, addresses of board of directors; • Number of shares of stock to be issued; • Amount of money capital to be raised through stock

of the business.

Corporate Structure• State grants a corporate charter that

allows the corporation to operate in that state

• Raise capital by selling stocks or bonds.

Types of Stock• Common stock gives stockholders right to

vote and a percentage of future profits. • Preferred stock doesn’t give voting rights,

but guarantees a dividend and these stockholders have first claim on assets left over if corporation goes out of business.

• Stockholders then elect a board of directors who will supervise and control the corporation by hiring people to run the day-to-day operations of the business.

Franchises• A contract in which a franchiser sells to

another business the right to use its name and sell its product.

• The business buying it, the franchisee, pays a fee that could include a percentage of all money taken in.

• Franchises often have training programs to teach the franchisee and to set the standards of business operations.