Business Organizations
Business Structures
• A business organization is an establishment
formed to carry on a commercial enterprise.
• A sole proprietorship is a business owned and
managed by one individual.
• Business licenses grant permission to
undertake and carry out business, while
zoning laws influence where businesses may
be located.
• Sole proprietorships are responsible for all
debts that the business may acquire.
• They are said to have unlimited personal
liability.
• Most sole proprietorships are small, so they
have limited resources to allocate for benefits
to both employees and owners.
Partnerships
• Partnerships are business organizations that are owned
by two or more persons who agree on a particular
division of responsibilities and profits.
• A general partnership is a partnership in which
partners share equally in both responsibility and
liability.
• A limited partnership is a partnership in which only
one partner has unlimited personal liability for the
firm’s actions; the other partners contribute only
money.
• A limited liability partnership is a partnership in which
all partners are limited partners with limited liability.
• Articles of partnership list each partner’s
rights and responsibilities, including how
partners will share profits and losses.
• They may also address issues such as the
duration of the partnership and tax
responsibilities
• The Uniform Partnership Act ensures that
partnerships are formed according to a
common set of rules and standards.
Corporations
• A Corporation has a legal identity beyond that of
the owner or partners.
• It is owned by individual stockholders.
• A closely held corporation has a limited stock
offering, whereas publicly held corporations offer
stock on the open market.
• Information such as the following is required:
Corporate name, statement of purpose, length of
time the business will run, founders’ names and
addresses, headquarters’ business address,
method of fund-raising, and rules for
management.
Corporation (cont.)
• A Stock is a share representing an owned
portion of a corporation.
• Profit is a form of income, and dividends are
the portion of corporate profits that is paid to
stockholders.
• Stockholders must then p ay income tax on
the profit they receive from dividends.
• A merger is the combination of two or more
corporations.
• Horizontal mergers join two or more firms that
had competed in the same market to sell the
same good or service.
• Vertical mergers join two or more firms that
are involved in different stages of producing
the same good or service
• Conglomerates are combinations of more than
three businesses that sell unrelated goods or
services.
• Multinational corporations operate in more
than one country at a time.