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Learn why it's important to conduct an honest self-evaluation before becoming an entrepreneur. Explore the concept of franchising and its advantages. Understand the pros and cons of sole proprietorship, unlimited liability, partnerships, and corporations. Discover the role of licensing in certain occupations and businesses.
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Entrepreneurship Chapter 37 – Retail selling
Why should you do an honest self-evaluation if you’re considering becoming an entrepreneur? • It helps you assess whether you have the personal qualities, abilities, interests, and necessary skills.
What is a franchise? How does Franchising work? • It is a legal agreement to operate a business in the name of a recognized company.
List three advantages and three disadvantages of sole proprietorship. • Easy to start. • All business decisions are your own. • Generally taxed less than other forms of business. • Allows more freedom from government regulations. • Owner entitled to all profits. • Harder to raise capital with only owner’s funds. • Making decisions can be difficult. • Owner must provide all the money and management skills. • Must work long hours.
What is unlimited liability? It mean you are liable (responsible) for all debts the business incurs to your total ability to make payments. How does unlimited liability affect the type of business organization selected by an entrepreneur? Unlimited liability applies to sole proprietorships and general partnerships. Therefore, if you wanted to limit your liability, you might want to consider the limited partnership or corporate form.
What are the two different kinds of partnerships? General Partnership and Limited Partnership Explain the difference between them. In a general partnership, each partner shares in the profits and losses of the business. In a limited partnership, each partner is only liable for any debts only up to the amount of his/her investment in the company.
List three advantages and three disadvantages of Partnership. • Combines skills of the owners. • Access to more money. • Able to operate and expand easily because of more capital, etc. • Owners may not always agree. • Actions of one partner are binding on the others. • Business is dissolved if one partner dies, etc.
List three advantages and three disadvantages of corporation. • Each owner has limited liability. • Easy to raise money for expansion. • People can enter and leave simply by buying shares. • Harder to establish than the other two forms of business. • Increased government regulation. • Higher taxes on the corporation and on each shareholder.
What three groups of people are involved with the corporate form of ownership? Shareholders Directors Officers
What is a foreign corporation? A foreign corporation is incorporated under the laws of a different state from the one in which it does business.
What is a Subchapter s corporation? A small business that is taxed like a partnership or proprietorship. • Must be 35 or less shareholders. • Incorporated in the US • 20% or less of revenue from investments & 80% or less of revenue from foreign sources.
What are five reasons for licensing certain occupations and businesses? • To protect the public from unscrupulous people. • To establish minimum standards of education • To establish minimum standards of training • To maintain health of all citizens • To maintain welfare of all citizens.
