Ownership Structures
Types of Business Ownership
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Sole proprietorship
Partnership
Corporation
LLC
Sole Proprietorship
Owned by one person
 Small business
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Jewelry stores
Restaurants
Hair-styling salons
Physicians
Attorneys
Accountants
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Supplies
Advertising
Rent
Taxes
 Owner pays for everything
 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
Partnerships
Owned and managed by
a small group-2 or more
 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
Corporations
 People become owners by buying
Owned by a number of shares of stock--shareholders
 Corporation is treated as one
people and operated
person
under written
permission (Certificate  To raise money, you can sell shares
of ownership
of Incorporation) from
the state in which it is
located
 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
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
Limited Liability Company
Combines elements of
corporations,
partnerships and sole
proprietorships
 Any entity can be an owner,
including individuals,
corporations, partnerships or
trusts
 "limited liability" aspect stems
from the protection an LLC
organization offers its owners
Advantages
 Personal property of owner
is protected
 Owner is still able to claim a
profit or loss on personal tax
returns
 Fewer restrictions than
corporation
E-Commerce
Buying and selling goods
and services via the internet
 Reach customers anywhere in the  Keep a record of you
world
receipts, order
confirmations, and
 Catalogs on the internet save big
merchant’s Internet address
money in printing and mailing
 Web Trust is assurance
 Consumers can shop 24/7
service that combat security
 Privacy of the customer is of
and privacy issues when
concern
conducting shopping,
 Be careful where you shop
banking, and other online
transactions.