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Business Organizations

Business Organizations. Economics Mr. Bordelon. Advantages. Disadvantages. Easy start-up and close Few regulations to comply with Owner gets all the profit Owner has full control. Unlimited liability Limited resources Lack of permanence.

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Business Organizations

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  1. Business Organizations Economics Mr. Bordelon

  2. Advantages Disadvantages • Easy start-up and close • Few regulations to comply with • Owner gets all the profit • Owner has full control • Unlimited liability • Limited resources • Lack of permanence Sole ProprietorshipsBusiness owned and managed by a single individual.

  3. Advantages Disadvantages • Easy to start-up • Shared decision-making • Specialization • Better access to resources • Taxation • Unlimited liability (for general partners) • Conflict PartnershipBusiness organization owned by two or more persons who agree on a specific division of responsibilities and profits.

  4. Types of Partnership • General partnership. Partners share equally in both responsibility and liability. • Limited Partnership. Only one partner is required to be a general partner, or to have unlimited personal liability for the firm. • Limited Liability Partnership. All partners are limited partners.

  5. Advantages Disadvantages • Stockholders • Limited liability • Ownership of stock freely transferable • Corporations • Ability to expand and do it quickly • Able to raise capital through selling of stocks and bonds • Permanent existence • Relatively difficult to start-up in doing paperwork (though not really :D) • “Double” taxation • Control based on stock ownership, subject to hostile takeover if stock ispublicly traded • Heavily regulated compared to other business organizations CorporationLegal entity owned by individual stockholders, each having limited liability for debts of the corporation.

  6. Types of Corporations • C corporation. Taxed separately from owners. Can have more than 75 employees. Stock can be traded publicly. • S corporation. Taxed with owners. S corporations do not pay federal income taxes. Income/loss divided among and passed through to shareholders., who then report income/loss on own tax return. Limited to 75 employees. Stock not traded publicly. • Limited Liability Corporation. Taxed with owners. No limits on employees. Not a federal entity, created by States. Limited liability and taxation passed through to shareholders.

  7. Essay • You are to create a business of your own. You must choose between either a sole proprietorship, partnership, or corporation. Explain why you chose your business organization. Explain why the advantages of that organization will help your business succeed. For example, do not simply say, “because limited liability”—a 4 year old child can give me that; say why limited liability would help you. Explain how the disadvantages of that organization could drag your business down. Again, do not simply give me, “double taxation bad”. Tell me how it affects your business. Use the powerpoint and Chapter 8 from the textbook as refernence. • Bare minimum one full page. • Be creative. • No limitations on what you choose, even sole proprietorships. • Avoid politics or changing the hypothetical. • 100 points.

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