Legal Forms of Business
TLW:
Define terms used when discussing forms of business
Evaluate the differnt forms for a business
Check out what Wikipedia says about forms of business ownership
Create a colabrative definition for the following words
Sole Proprietorship-
A business that is wholly owned by a single person, who has unlimited liability.
All debts and/or profits are the owners debts/ profits.
a person owned by a one person who makes all the decissions.
owning a business all by yourself. being responible for the entire company.
A person who owns and runs their own business.
A business owned and ran by one person alone.\
Sole Proprietorship is a type of business entity which is owned and run by one individual and where there is no legal distinction between the owner and the business.
someone who owns and runs there own buisness.
Partnership-
The members of a business venture created by contract.
A partnership is a type of business in which partners (owners) share with each other the profits or losses of the business.
a group of two people or parties who own and make the business decissions
A business in which two people make decisions.
Is when two people equally own and operate a business together.
A business owned and ran by two or more people.
Partnership is when partners share with each other the gains or losses of the business.
a partnership is when two people run a buisness.
Corporation-
The most common form of business organization , and one which is chartered by a state and given many legal rights as an entity separate from its owners. This form of business is characterized by the limited liability of its owners.
Many people are involved in a corporation, it is run by more than one person.
a business owned by many people
A company and or business run by multiple people.
a legal entity separate from the persons who own it or the persons who manage or operate it.
A business owned and ran by many people, this is most common type.
A corporation is a legal entity separate from the people who manage or operate it.
a corporation is a buisness ran by more than one person.
Share of stock--
An ownership position in a corporation that represents a claim that share the corportations assets and profits.
In the investment world, a share of stock is a share of ownership of the corperation.
owning a peice of a business though a stock
A piece of a company that you own. that you recieve momey for.
Is when many people have ownership of a corporation through stocks.
A share of stock represents a share of ownership in a corporation.
Board of Directors-
A body of elected or appointed members who jointly oversee the activities of a company or organization.
They have the final say in the business decisions.
they make all the final decisions for the business Example: financial, equipment, employee's ect.
A group of people that makes all decisons final.
a share of ownership in a corporation.
Is a group of people that have been picked to make all the final decisons for a company.
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization.
Dividends-
Dividends are payments made by a corporation to its shareholders. It is the portion of corporate profits paid out to stockholders.
Businesses either re invest profits or pay off the sharholders with dividends.
The part of the earnings of a corporation that is distributed to its shareholders; usually paid quarterly
Part of the money that is divided between the people who are the stockholders.
Are the payments a corporation gives to its shareholders
A taxable payment declared by a company's board of directors and given to its shareholders out of the company's current or retained earnings, usually quarterly.
share of a surplus.
Automatic reinsurance that requires an insurer to transfer and the reinsurer to accept the part of every risk that exceeds the insurer's predetermined retention limit.
I can't think of a nother definition of this one.
A company cedes an equal proportion of its insurance liability and premium applicable to covered risks.
Is reinsurance for a person who has transfered and has to take on part of the risk that goes beyound the pervious limit.
Surplus share reinsurance is one of two forms of pro rata reinsurance whereby the ceding company cedes an equal proportion of its insurance liability and premium applicable to covered risks.
Liability-
Claim on the assets of a company or individual-excluding ownership equity.
Liability is responsibility in a way because it means your responsible fo what happens in your business.
being responsable for your business and excepting that responsibility.
You being responsible for your company.
Anything that is a hindrance or puts an individual or group at a disadvantage.
Is anything/anyone that holds your business back
Liability is anything that is a hindrance or puts a person or a partnership at a disadvantage.
S Corporation--
Corporation with a limited number of stockholders (100 or fewer) that elects not to be taxed as a regular corporation and meets certain other requirements.
S corporations are corporations that elect to pass corporate income, losses, deductions and credit through to their shareholders for federal tax purposes.
A small business corporation with a limited number of shareholders. Its major significance is the fact that an S corporation usually avoids corporate income tax. Corporate losses can be claimed by the shareholders
A small business that only has a smell number of shareholders.
Is a corporation that makes a valid election to be taxed.
Is a corporation that has 100 or less stockholders and passes corporate losses, credit and such through their shareholders for federal taxes, this lets them avoid double taxation on the corporate income.
S corporation status provides many of the benefits of partnership taxation and at the same time gives the owners limited liability protection from creditors.
Sole Proprietorship
Advantages-
Its a simple and most common form of business. Most small business are sole proprietorship.
You have it your way and wont risk the arguments that you could have with a partner.
you get to make all the decisions so you dont have the chance of confrontation
You wont need to worry about comprimising with your partner on certain things. an dyou are the one person in charge so it will most likely go the way you want it to.
No one to dispute with you on decisions you make.
You are in charge no one else, so you make all the decisions
Advantage: A sole proprietor has complete control and decision-making power over the business.
Disadvantages-
An individual proprietor owns and manages the business and is responsible for all business transactions. The
owner is also personally responsible for all debts and liabilities incurred by the business.
You are responsible for your business by yourself and that could get overwhelming.
you only have one form of funding and if your business fails, you have no one to blame, its all your fault.
You have all the responsibility of taking care of the business and that would be hard.
You have no one to help you make decisions for the business.
There is no one else at fault if the business has problems, its a lot of work, and you can't rely on anyone else to make the decisions.
Disadvantage: All responsibilities and business decisions fall on the shoulders of the sole proprietor.
Partnership
Advantages-
General partnerships consist of two or more partners who are both responsible for the business. They share assets, profits, liabilities, and management responsibilities for running the business.
Its less work to do by yourself less stressful.
less stress & more than one form of financial funding
You can have someone else to count on.
Your not the only person making decisions, so it's not all on your shoulders.
More people to make decisions and you can share ideas and responsibilities with each other
Advantage: Partnerships consist of two or more partners who are both responsible for the business.
Disadvantages-
Partners may have different visions or goals for the business.There may be unequal commitment in terms of time and finances.
They have different ideas for the business so partners could butt heads.
you have the chance of confrontation
Your partner may not be seeking what you are. so they could not try hard.
You and your partner have to agree on everything, or you'll have problems.
Your partner my not feel that same about something, one person may be more commited then the other, and you have to share work and decision making with some one else.
Disadvantages: Partners may have different visions or goals for the business.
Corporations
Advantages- There are more people to help get things done and make sure that everyone has a task and you're not the only one doing everything.
More than one person is helpng to run it so its easier than having all the weight on your shoulders.
easier to advertize, more financial funding,
because there is alot of people you wont have to worry about doing all the work.
All views/opinions are covered so the decision will be made wisely.
More people to spread the work load to, and you dont have as much indiviual responsibility
A corporation continues to exist until the shareholders decide to dissolve it or merge with another business.
Disadvantages- If the business doesn't do very well the other person might drop you're business.
If it fails alot of people are out of business.
a lot of people and alot confrontation With all the people you know they wont all agree. so it would get overwhelming. Lots of people are trying to make a decision will make it take longer to decide.
The more people the harder it may be to make decisions and peole might not get along with each other and that can reflect on the business
Disadvantages: It costs money to incorporate.
Brainstorm a list of Businesses that could/should use each type of ownership
Sole Proprietorship-- Golden Pizza Gigi's Monogramming, Entertainment Dance Company , Smoking Skillet, The Lemon Tree Buzzards Pizza
Partnership-- Bootleggers, Tangles, Tips, + Tans, <-- thats the only one i can think of The New mexican place in Oskie :), Gigstad Farms, Lopez de Mexico
Corporation-- Dillons, Walmart, Kholes, Victorias Secret, Toys 'R' US, American Express
PepsiCo and Johnson & Johnson
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