Business Ownership & Operations

1. Business Ownership & Operations Section 6

2. soleproprietorship a business owned by one person a business owned by two or more people who share its risks and rewards partnership a company that is registered by a state and operates apart from its owners corporation

3. an organization that is owned and operated by its members cooperative a type of business that focuses on providing service, not on making a profit nonprofitorganization a contractual agreement to use the name and sell the products or services of a company in a designated geographic area franchise

4. Sole Proprietorship, Corporation, and Partnership

5. Advantages of Sole Proprietorships Easy to start Proprietors are in charge Proprietors keepall the profits Taxes are lowerthan a corporation’s

6. A major disadvantage of owning a sole proprietorship is that the owner has unlimited liability. unlimited liability when the owner is responsible for the company’s debts Other Disadvantages of Sole Proprietorships Limited accessto credit Many run outof money The owner may not have the necessary skills The business endswhen the owner dies

7. To start a partnership, you need a partnership agreement. Advantages of Partnerships Easy to start Easier toobtain capital Easier toobtain credit Not dependent on a sole person Only taxed once Diversity in skills

8. Disadvantages of Partnerships Business risk is shared Unlimited legal and financial liability is shared If one partner makes a mistake, all partners are responsible

9. To form a corporation, the owners must get a corporate charter from the state where their main office will be located. Advantages of Corporations Limited liability Ability to raisemoney byselling stock Business doesnot end when anowner dies

10. Disadvantages of Corporations Double taxation More governmentregulation Difficult andcostly to start • Income is taxed. • Stockholders pay taxes on profits issued to them

11. Functions of Business producer a business that gathers raw goods (timber, dairy, crops) a business that changes raw materials into more finished products (oil into gasoline, canned food) processor a business that makes finished products out of processed goods (cars, computers) manufacturer

12. Functions of Business a business that moves goods from one business to another (distributor of paper products) intermediary wholesaler a business that distributes goods in bulk quantities to other businesses (clothing manufacturer) a business that purchases goods from a wholesaler and sells them to consumers, the final buyer of the goods (Wal-Mart) retailer

13. the process of creating, expanding, manufacturing, or improving goods and services production the buying and reselling of goods that have already been produced procurement the process of planning, pricing, promoting, selling, and distributing ideas, goods, and services marketing

14. the process of achieving company goals by planning, organizing, directing, controlling, and evaluating the effective use of resources management the business or art of money management finance maintaining and checking records, handling bills, and preparing financial reports for a business accounting

15. Types of Businesses Functions ofBusinesses • Producers • Processors • Manufactures • Intermediaries and Wholesalers • Retailers and Service Businesses • Production and Procurement • Marketing • Management • Finance and Accounting In the U.S.A., service businesses employ about three-quarters of the workforce and are rapidly increasing in numbers.