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Unit 4—Ownership Structures

Unit 4—Ownership Structures. Finance Foundations A Mrs. Sorrell. Three Types of Business Ownership. Sole proprietorship Partnership Corporation. Sole Proprietorship. Owned by one person Small business Jewelry store Restaurants Hair-styling salons Physicians Attorneys Accountants

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Unit 4—Ownership Structures

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  1. Unit 4—Ownership Structures Finance Foundations A Mrs. Sorrell

  2. Three Types of Business Ownership Sole proprietorship Partnership Corporation

  3. Sole Proprietorship • Owned by one person • Small business • Jewelry store • Restaurants • Hair-styling salons • Physicians • Attorneys • Accountants • Owner pays for everything • Supplies • Advertising • Rent • Taxes • Use personal savings or borrow • More than two-thirds of U.S. business • Proprietor has complete responsibility for business decisions • Unlimited liability—full responsibility for your company’s debts • May need only a license or permit to start your sole proprietorship

  4. Partnerships • Owned and managed by a small group • Share the risks and rewards • Written agreement (contract) • Unlimited liability for the debts of the partnership • License to start • Pay taxes only on personal profits • Easier to obtain capital • Different skills of partners • All partners equally responsible for bad decisions of one partner

  5. Corporations • Business owned by a number of people and operated under written permission (Certificate of incorporation) from the state in which it is located • People become owners by buying shares of stock--shareholders • Corporation is treated as one person • To raise money, you can sell shares of ownership • Each share gets a portion of the profit and a vote on business operations • Board of directors control the operation • Hire officers to run the business

  6. Corporations, con’t. • Limited liability is the major advantage • Personal property and savings are not at risk • Owners can sell their shares and the business does not change or end • Sell new shares to raise more capital • Corporations often have to pay more taxes • Owners are taxed on their income • Corporation pays taxes also (double taxation) • Government closely regulates corporations • More difficult to start and run a corporation

  7. E-Commerce • Buying and selling goods and services via the internet • Reach customers anywhere in the world • Catalogs on the internet save big money in printing and mailing • Consumers can shop 24/7 • Privacy of the customer is of concern • Be careful where you shop • Keep a record of you receipts, order confirmations, and merchant’s Internet address • Web Trust is assurance service that combat security and privacy issues when conducting shopping, banking, and other online transactions.

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