FUNERAL HOME OPERATIONS-BUSINESS ORGANIZATION #1: SOLE PROPRIETORSHIP ; PARTNERSHIPS – Flashcards

1.)What is the business idea? 2.)Business Identification? 3.)Do you need help? 4.)MONEY...where do I get some of it? 5.)How will you form your business entity?

-Businesses often fail because the management team is ineffective -In this management team COMPETENCE is an essential factor -The type of competence that is needed depends upon the type of business -It is important to note that not all members of the management team need the same experience. -Often, businesses will seek professional support from outside personnel -This can be an effective way of dealing with shortcomings of the team in some areas. This can be done through an outside board of directors, consultants, or other professional relationships

1.)Sole Proprietorships 2.)Partnerships 3.)Limited Liability Company (LLC) 4.)Corporations

-According to the National Funeral Director's Association approximately 20 % of their member funeral homes in the country are established as proprietorship's

-A *PROPRIETORSHIP* is a business owned and operated by one person -The proprietor has title to all of the business assets and, therefore, is subject to all of the claims of creditors -He/she receives all of the profits of the business but also must assume all of the risks and pay all of the debts -This is the simplest and cheapest way to start a business and is often used by many new business startups -It has the advantages that the owner is free from the interference of partners, shareholders and directors

-There are several drawbacks to the proprietorship form of business organization -The major drawback is that there is no limit to the liability of the owner -Thus if the business fails the owner's personal assets can be taken by creditors - the owner is not considered to be an employee of the business and, therefore, cannot receive some of the tax-free benefits that employees of corporations receive such as insurance and pensions - a proprietorship can cause problems in the event of the death of the owner, the assets of the company will pass to the heir along with all of the liabilities -In this event the business may be left for an indefinite time without leadership resulting in the ruin of the business

-voluntary association of two or more people who have combined their money, property, or labor and skill, or a combination of these, for the purpose of carrying on as co-owners some lawful business for profit." *Law for Business, 18th edition, page 375* -If you can enter into a contract, you can enter into a Partnership (assuming one meets the criteria for a contract

-it combines the talents of several persons to create a company that makes use of the best of all of the partners 1.)Increase in skill 2.)Leadership assistance 3.)Tax/income advantages

1.)Authority issues 2.)Business stability (i.e. sickness, death or dissolution) 3.)Financial liability

-TO BE HONEST, HEALTHY, CAPABLE and COMPATIBLE -When a partnership is established, it is essential that the rights and duties of each partners be clearly spelled out...

-The Rights and Duties are typically spelled out -Unless it is specifically stated in the Articles of Partnership it is assumed that all partners will share equally in the profits and the liabilities

-This means that any partner has the authority to bind all of the other partners to an agreement -This is one reason that it is so important that the partners be honest and compatible

-It is best to have some Succession Planning in place to help with issues that might arise from these events -Many partners carry life insurance that will allow the buyout of the decedent's share of the business

1.)General 2.)Silent 3.)Secret 4.)Dormant 5.)Nominal

1.)Actively engaged in operation 2.)Assumes financial liability for partnership debt 3.)Assume the risk of the partnership

1.)May or may not be known as a partner 2.)Right to (pre-agreed) share of profits for their investment 3.)No active role in the running of the firm

1.)Active role in the firm 2.)Tries to avoid being known as a partner 3.)If found to be a partner, assumes financial risks

1.)Combines Secret and Silent advantages 2.)Limited financial liability if management role is not active 3.)Limited Return on Investment (ROI)

1.)Public thinks they are a partner 2.)No share of profits or management role 3.)Could be held for financial obligations of partnership

-is an agreement to buy and sell merchandise.

-is an agreement to provide service(s).