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Chapter 8 Section 1

Chapter 8 Section 1. -Business organization : an establishment formed to carry on commercial enterprise. Sole proprietorships are the most common forms of business organizations.

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Chapter 8 Section 1

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  1. Chapter 8 Section 1

  2. -Business organization: an establishment formed to carry on commercial enterprise. Sole proprietorships are the most common forms of business organizations. -Sole proprietorship: a business owned and managed by a single individual. That person earns all of the firms profits and is responsible for all the firms debts.

  3. -Many types of businesses can flourish as a sole proprietorships. There is a chance that your local bakery, barber shop or hair salon and more. -According to the Internal Revenue Service, about 75 percent of all businesses are sole proprietorships. Most are small. Altogether they generate only about 6 % of all US sales.

  4. -A Sole proprietorship is simple to establish and offers the owner numerous advantages. -Easy start up is one of the main advantages of a sole proprietorship. -With a small amount of paper work and legal expense someone can start a sole proprietorship.

  5. -Authorization: Must obtain a business license. Doctors and daycare providers may also be required to obtain a special license from the state. -Site permit: Must obtain a certificate of occupancy to use a building for the business you are starting; If not going to work in the home.

  6. -Businessname: You must register a business name if not using the his or hers first or last name. • Business license: authorization to start a business issued by the local government.

  7. Entrepreneurs must do/have the following: • Seek out responsibility • Are willing to take risks • Believe in themselves • Desire to reach their full potential • Have high energy levels • Are upbeat and optimistic

  8. Entrepreneurs also: • Look toward the future and not the past. • Value achievement over money • Maintain flexibility as they face new challenges • Are strongly committed to their goals.

  9. A sole proprietorship is the least-regulated form of business organization • Sole proprietorships may also be subject to local zoning laws

  10. -Cities and towns often designate separate areas or zones for residential use and for business • Zoning law- law in the city or town that designates separate areas for business • Liability- the legally bound obligation to pay debts • A major advantage of the sole proprietorship is that the owner gets to keep all profits after paying taxes

  11. Potential profits motivate many people to start their own business • If the business succeeds, the owner does not have to share the success with anyone else • Another advantage of a sole proprietorship is that sole proprietors can run their business as they wish. This means they have the ability to respond quickly to changes in the marketplace.

  12. Fast flexible decision making allows sole proprietorships to take full advantage of sudden opportunities • Finally, if sole proprietors decide to stop operations and do something else for a living, they can do so easily • They must, of course, pay all debts and other obligations like taxes, but they do not have to meet any other legal obligations to stop doing business

  13. - As with everything else, there are tradeoffs with sole proprietorships • -The independence of a sole proprietorship comes with a high degree of responsibility • The biggest disadvantage of sole proprietorships is unlimited personal liability • Sole proprietors are fully and personally responsible for all their business debts

  14. -A sole proprietorship has a limited life. -If a sole proprietor dies or closes shop due to retirement, illness, loss of interest in the business, or any other reson, it ceases to exist. -

  15. -Sole proprietorships often have problems finding and keeping good employees. -Small businesses usually can not offer security and advancement opportunities that employees look for in jobs. -Many sole proprietorships are able to offer employees little in the way of fringe benefits.

  16. -Fringe Benefit- Payment other then wages or salaries.

  17. -Fringe benefit payments include paid vacation, retirement pay, and health insurance. -Lack of experienced employees can hurt a business. -The flip side of total control is total responsibility. -A sole proprietor can not count on anyone else to maintain the business.

  18. Question 1: What is a business organization?

  19. Question 2: What is a sole proprietorship?

  20. Question 3: What role does business licenses and zoning laws play in sole proprietorship?

  21. Question 4: What kind of liabilities are sole proprietor subject to?

  22. Question 5: Why do you think many sole proprietorships are able to offer few fringe benefits to workers?

  23. Question 6: What are the three small requirements must you meet to start a business?

  24. Question 7: According to the IRS, about what percent makes up sole proprietorships?

  25. Question 8: Entrepreneurs have a high?

  26. Question 9: What is liability?

  27. Question 10: Disadvantages to Sole Proprietorships is?

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