TYPES AND FORMS OF BUSINESS OWNERSHIP
Forms of Business Ownership -
Sole Proprietorship
Definition
What is it?
An unincorporated business that is owned by one individual. Her sole responsibility for making decisions, receives all profits, claims all losses.
Advantages
-Your the boss
-You keep all the profits
-startup costs are low
- you have max privacy
Disadvantages
- Less financial Protection
-Less Legal Protection
-High Self Employment + taxes
-Taking A day off means Lost income
Examples
Local Grocery Stores
Local Clothes Stores
Freelance graphic designer
Other
It is the simplest kind of business. The owner pays everything with his personal income.
Sources
Forms of Business Ownership - Partnership
Definition
What is it?
A partnership is a type of business where two or more persons jointly own the company and are responsible for managing it and for any profits or losses it makes. Nov 15, 2022
Advantages
- 2 heads are better than one
-Easy to establish and start up costs are low.
You have less financial burden
Disadvantages
Future Selling Complications
You have to split profits
Examples
Law firms
Real Estate
physician
Other
Partnership businesses are not necessarily 2 people; it could be a school, the government and an organization.
Sources
Forms of Business Ownership - Corporation
Definition
What is it?
An organisation called a corporation is one whose shareholders choose a board of directors to manage its operations. The corporation, not the shareholders, is responsible for the operations and financial health of the company.
Advantages
-Easier access to capital
Lower tax rates
Separate legal Entity
Disadvantages
Time consuming
Subject to double taxation
Rigid protocols
Examples
Apple
Microsoft
Other
A corporation, also referred to as a C corp, is a separate legal entity from its owners.
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Forms of Business Ownership - Franchise
Definition
What is it?
An unincorporated business that is owned by one individual. Her sole responsibility for making decisions, receives all profits, claims all losses.
Advantages
Little to no industry experience is necessary
Existing customer base and brand awareness
Disadvantages
Cost and fees, and down payment
Limited created ideas
Examples
mcdonalds
Subway
Other
Franchises employ 18 million people in the United States and output more than 890 billion dollars each year. It is estimated that 10.5% of businesses with paid employees are franchises.
Sources
Forms of Business Ownership - Co-operative
Definition
What is it?
An association of people (organization) that is owned and controlled by the people to fulfill their shared needs and ambitions in the economic, social, and/or cultural spheres through a jointly owned and democratically run firm is referred to as a cooperative (enterprise).
Advantages
-there are equal voting rights for members
-this structure encourages member contribution and shared responsibility
-liability for members is limited
Disadvantages
-Equal voting rights for all members, regardless of investment, may not be suitable for a firm driven by investors.
-Legal restrictions on dividend payments on shares might not be appropriate for an investor-driven company.
Examples
retail supply
fish marketing
cable television
Other
The co-op company structure dates back at least 519 years. According to Aberdeen, Scotland's Shore Porters Society, the world's first cooperative was founded in 1498.
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