Chapter 8 business structures part 1

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Business organization
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an establishment formed to carrt on commerical enterprise. Company or firm, and most common form is a sole proprietorship
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Sole Propiertorship
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business owned and managed by an individual, responbible for ALL debts, most are SMALL
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SOLE PROPRIETORSHIP percentage in business
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75%
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SOLE PROPRIETORSHIP percentage in sales
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6%
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SOLE PROPRIETORSHIP requirement 1
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Authroization: Business license
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SOLE PROPRIETORSHIP requirement 2
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Site Permit
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SOLE PROPRIETORSHIP requirement 3
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Name: Register
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SOLE PROPRIETORSHIP advantage 1
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Simple to establish
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SOLE PROPRIETORSHIP advantage 2
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Easy start-up
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SOLE PROPRIETORSHIP advantage 3
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Least expensive
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SOLE PROPRIETORSHIP advantage 4
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Earns all profits
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SOLE PROPRIETORSHIP advantage 5
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Full control
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SOLE PROPRIETORSHIP advantage 6
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Fast
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SOLE PROPRIETORSHIP advantage 7
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Fleixble changes
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SOLE PROPRIETORSHIP advantage 8
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Easy to discontinue
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SOLE PROPRIETORSHIP disadvantage 1
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Unlimited personal liability (pay dets)
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SOLE PROPRIETORSHIP disadvantage 2
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Limited access to resources (banks hesitatn to finance)
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SOLE PROPRIETORSHIP disadvantage 3
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Difficult to expand
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SOLE PROPRIETORSHIP disadvantage 4
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Not enough time
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SOLE PROPRIETORSHIP disadvantage 5
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Lack of permanence
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SOLE PROPRIETORSHIP disadvantage 6
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Little Fringe benefits (payments to employees other than salary
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Partnership
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business organization owned by two or more people
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Partnnerships have
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divided power and benefits
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General Partnership
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Most common, equal share of responsibility and liability
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example of general partnership
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Doctors, lawyers
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Limited Liability partnerships
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all limited partners, limited from each other”s liability
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Example of Limited liability partnership
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Dentists not blamed for other dentists mistakes
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PARTNERSHIP advantage 1
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Easy start u: inexpensive
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PARTNERSHIP advantage 2
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Articles of partnership: priavte agreement
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PARTNERSHIP advantage 3
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If they do not have one they fall under Uniform Partnership Act where the state sets the rules and standarads
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PARTNERSHIP advantage 4
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Subject to little government regulation
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PARTNERSHIP advantage 5
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EAch partner brings new strangths and skills
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PARTNERSHIP advantage 6
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larger pool capitals
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PARTNERSHIP advantage 7
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easier to expand
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PARTNERSHIP advantage 8
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not subject to special taxes
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PARTNERSHIP advantage 9
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Pay income tax on their share
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PARTNERSHIP disadvantage 1
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Except for limited liability partnerships, one partner has unlimited liability
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PARTNERSHIP disadvantage 2
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Each partner bound by other partners actions
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PARTNERSHIP disadvantage 3
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Potential conflict
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Profession assocations
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work to improve the image, working conditions, and skill levels of people in particualar positons
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example of professional assocation
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national education association
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Business associations
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collective busienss interest of a city, state or other georgaphical area, or a group of similar business
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example of buiness assocations
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chamber of commer- attracts workers to area

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