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8-1: Sole Proprietorship

8-1: Sole Proprietorship. PPT Notes. Business Organization. Definition: enterprise that produces goods or provides services in order to make a profit. Sole Proprietorship. Definition: business owned and managed by one person Account for more than 70% of all businesses in the U.S.

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8-1: Sole Proprietorship

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  1. 8-1: Sole Proprietorship PPT Notes

  2. Business Organization • Definition: enterprise that produces goods or provides services in order to make a profit

  3. Sole Proprietorship • Definition: business owned and managed by one person • Account for more than 70% of all businesses in the U.S. • Generate less than 5% of all sales

  4. Advantages of Sole Proprietorships • 1. Easy to open and close • Requires money, license, permit, and registered name • 2. Few regulations

  5. Advantages… (continued) • 3. Freedom and control • 1 person makes the decisions • 4. Owner keeps profits

  6. Disadvantages of Sole Proprietorships • 1. Limited funds/money • 2. Limited life • 3.Unlimited liability • Owner is responsible for all financial aspects of the business

  7. 8-2: Forms of Partnerships

  8. Partnerships • Definition: a business co-owned by 2 or more people who agree on how responsibilities, profits, and losses are divided

  9. Types of Partnerships • General partnership: partners share management of the business • Each partner is liable for all business debts/losses

  10. Types of Partnerships (continued) • Limited partnerships: partnership in which 1 person is not actively involved in the day-to-day running of the business • This partner is only liable for what he/she has invested

  11. Types of Partnerships (continued) • Limited liability partnership (LLP): all partners are limited partners • Not responsible for the debts and liabilities of the other partners

  12. Types of Partnerships (continued) • Not all businesses can register as LLP’s • LLP’s usually include medical partnerships, law firms, and accounting firms

  13. Advantages of Partnerships • 1. Easy to open and close • 2. Few regulations • 3. Access to resources (money)

  14. Advantages of Partnerships (continued) • 4. Joint decision-making • 5. Specialization • Each partner may bring specific skills to the business

  15. Disadvantages of Partnerships • 1. Unlimited liability • Partners are responsible for all of the business’s debt • 2. Potential for conflict • Caused by more than 1 person making decisions

  16. Disadvantages of Partnerships (continued) • 3. Limited life • When a partner dies, retires, or leaves, the partnership ends

  17. Questions • 1.Explain how a sole proprietorship rests on the principles of free enterprise.

  18. 2. If you were looking to form a partnership, what traits would you want in a partner? Name 5 traits (and no…good looking doesn’t count).

  19. 3. Ideally, would a major retail or manufacturing business work as a partnership? Explain why or why not.

  20. 4. Name 2 types of businesses that would thrive as sole proprietorships.

  21. 5. Name 2 types of businesses that would thrive as partnerships.

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