Entrepreneurship/Business Ownership


Types of Businesses | Forms of Business | Entrepreneurship | Business Plan | Review

Types of Businesses

There are many different types of businesses. Here are some of the types:

Forms of Business

wordleIn addition to the different types of businesses, there is also the legal formation of a business.

Sole Proprietorship

Sole proprietorships make up 74% of all of the businesses in the United States. A sole proprietorship is a business that is owned by only one person. Sole proprietorship are easy to start and offers the own freedom to make all businesses decisions. The owner gets to keep all of the profits and has a great sense of pride in ownership. The disadvantages of a sole proprietorship included a limited source of start of funds, potential of working a lot of long hours and working hard. There is also unlimited risk. This means that the sole owner of the businesses is personally responsible for the debts (money owed) of the business. There is also limited life of the business. The business only exists as long as the owner does.

Partnership

partnersA partnership is a business owned by two or more people, but is not incorporated. A partnership can exist between two or more people. Partnerships are easy to create and offer an additional source of funds and different talents because there are more people owning the businesses. However, the partners are liable for the debts of the business. The profits are shared among several owners. There is the potential for disagreement among the owners and the business can dissolve suddenly.


There are different types of partnerships:

With a general partnership all of the partners share equal rights and responsibilities in the management of the business assumes full personal liability for the debts and obligations of the business one partner can enter into a contract on behalf of the partnership, making the other partner(s) legally bound to the terms of the contract. A limited partnership consists of at least one general partner and one or more limited partners. The general partner, just like in a general partnership, bears full personal responsibility for the debts and obligations of the business. The limited partner takes a passive role in the business and in fact does not participate in the management of the business at all. The limited partner's risk is limited to his or her investment in the business.

The limited liability partnership (LLP) is the same as a general partnership except that a partner cannot be held liable for the wrongful acts of other partners; and, in some states, the general partners cannot be held responsible for the debts and obligations of the business. The joint venture acts like a general partnership, but is clearly for a limited period of time or a single project.

Corporation

A corporation is a business that operates as a legal entity separate from any of the owners known as stockholders. Stockholders purchase shares of stock in the corporation which is an ownership in the corporation. As a result of their ownership, stockholders earn dividends and get a right to vote on company policies. Stockholders can sell their shares at any time.

Advantages include:

Disadvantages include:

Types of Corporations

C-Corporation. A C-Corporation is the most commonly used type of corporations suitable for businesses of any size. It can have any number of shareholders. Shareholder's assets are protected from the creditors of the corporation since the liability of the shareholders is limited to the amount contributed by them to the capital of the Corporation. The only disadvantage of C-Corporations is double taxation as profits are taxed first as income to the corporation, then as income to the shareholder when distributed as dividends.

S-Corporation. An S-Corporation is a smaller corporation and can have more than 75 shareholders. It is treated as a Partnership or a Limited Liability Company for tax purposes and therefore it avoids double taxation. It is also generally exempt from federal taxes. If a shareholder works for the company, and if there is a profit, he must pay himself wages, and must meet standards of reasonable compensation.

Limited Liability Company (LLC). A LLC is a fairly new type of hybrid business structure that is a legal entity that is formed by filing Articles of Organization at the state level. A LLC is similar to a C-Corporation with shareholders but without the formalities and stringent recordkeeping requirements normally associated with corporations. The members of an LLC are generally not responsible for the debts and obligations of the LLC. LLC is flexible in allocating ownership interest amongst partners. Ownership interest in an LLC can be divided in any way the partners see fit, regardless of if and how much capital is contributed by each partner. A LLC can be taxed like a partnership or a corporation. LLC must not have more than two of the four characteristics that define corporations: Limited liability to the extent of assets, continuity of life, centralization of management, and free transferability of ownership interests. Otherwise, the business would have to have a charter of a C-Corporation.

Other Forms of Business

In addition to the other forms of businesses mentioned above, there are a few others:

Assignment: Types of Corporations noteguide

Directions: Download the Types of Corporations note guide and put your answers in the answer document found in itsLearning.

Assignment: Ownership Factors Worksheet

Directions: Read each statement and evaluate whether it represents an advantage or disadvantage for the form of business ownership described.


Entrepreneurship

There is a saying that there are only three types of people in the world: those who watch what happened, those who wonder what happened and those who make things happen. Entrepreneurs are people who own, operate, and take the risk of a business venture.

Do you think you know who started some popular businesses? Give it a try:

My most satisfying day is the day I work the hardest -- the day I get the most accomplished. I think most people are that way. When they do something less than what they are capable of doing, its work. When they do an outstanding job in their performance, it's rewarding to them. ~ S. Truett Cathy

Enterpreneurs presentation
Click the picture to read the presentation

Assignment: What Makes a Successful Entrepreneur

Directions: Do you often wonder what it takes to be a successful entrepreneur? Let’s take a look at some published biographies of people who are worth millions because they put their ideas to work! Open the assignment in itsLearning for further instructions.

Assignment: Entrepreneur of the Year project

Directions: You have been selected as Entrepreneur of the Year by the magazine of your choice. Your picture will be on the cover and an article featuring your business will be inside. Create a magazine cover and write a feature story about you and your start up business. Open the assignment in itsLearning for further instructions.


Business Plan

A business plan is a formal statement of a set of business goals, the reasons they are believed attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.

10 keys to a Successful Business Plan

Take a moment to google business plan. There are many templates available to help you with proper formatting when writing a business plan.

Assignment: Question for Thought

Directions: Do some research of our local community to identify several business opportunities. Write a summary (in paragraph format) of what you find and submit directly in the textbox (do not submit a separate document) in itsLearning. Be sure to proofread.

Assignment: Current Event

Directions: Visit the following website: http://www.entrepreneur.com/technology/index.html and select one of technology related articles or video. Summarize the article or video in paragraph format (at least 5 sentences) and submit into the textbox in itsLearning.


Review


Resources

If you are having problems viewing this page, opening videos, or accessing the URLs, the direct links are posted below. All assignments are submitted in itsLearning. If you have having problems, contact Mrs. Rush through the itsLearning email client.

Entrepreneurs presentation: http://www.mrsrush.net/entrepreneurship/entrepreneurship.pdf

The Life of a Young Entrepreneur - Documentary: http://www.youtube.com/watch?v=OjYceP2Fup4

Types of Corporations note guide: http://www.mrsrush.net/entrepreneurship/type.pdf


Credits

10 Keys to a Successful Business Plan infograph: http://www.entrepreneur.com/article/231525


Transcript of this lesson