warmup do you know anyone who owns their own business? describe what they do

Warmup

Do you know anyone who owns their own business? Describe what they do.

Unit IIIBusiness and Labor

Part I – Types of Business

Sole Proprietorship single owner – most common

form of business in USAdvantages

1. Owner makes all decisions

2. Keep all the profits

3. No corporate income tax

4. Easiest to set up

Disadvantages1. Not an expert in all areas

2. Responsible for all mistakes

3. Unlimited Liability responsible for all debts, personal property can be taken

4. Hard to raise capital (money)

Partnership Two or more owners

Advantages1. Can raise more capital

2. Share in responsibility

3. No corporate income tax

Disadvantages1. Unlimited Liability responsible for all debts,

personal property can be taken

2. Share decision making

3. Share profits

4. More complicated to set up than sole proprietorship

CorporationCompany is owned by people

who buy its’ stockAdvantages

1. Can raise a lot more capital ($) through sale of stocks and bonds

2. Decisions are made by professionals

3. Limited Liability only responsible for how much you have invested

4. Earns the most money in US

Disadvantages1. Have little say in how the company is run

2. Only share in portion of profit

3. Most complicated to set up

4. Corporate Income Tax

Business Types and Profits

TypesSole Proprietorships = 72%

Corporations = 20%

Partnerships = 8%

EarningsCorporations = 83%

Partnerships = 12%

Sole Proprietorships = 5%

How are corporations established?

Charter: government permission to organize a corporation

Stock:

shares in the company sold to the public

Who owns a corporation?

Stockholders

How are corporations run?

Owners = Stockholders who elect the

Board of Directors who select the

President who hires

VP of Sales VP of ProductionVP of Finance

What other types of business organizations are there?

Non-Profit Organizations Businesses that are not out for

profitExamplesCooperatives

Nonprofit organization of people set up to carry out an economic activity

Franchise

Individuals buy right to use a corporations name and product

Warmup

How did Andrew Carnegie respond when workers at his steel mill went on strike?