BUSINESS ORGANIZATION March 7, 2013 PARTNERSHIP More formal/complex than a proprietorship (one owner) Partnership agreement : a written agreement among ALL owners. Details rules and procedures that guide owners and operation Identifies business name, investments, contributions of each partner Shows how profits and losses will be divided among partners Defines authority/responsibilities for each person Outlines how partnership can be dissolved Should have business name, and names of each partner for registration with the state PARTNERSHIP In your notes write down some benefits to a partnership. Think of a famous partnership (current or past). What do you think each person brought to the table? CORPORATION Subject to many more laws Liability of owner is limited to the amount invested Must follow the laws of the state it was organized in To of ficially form, you must file articles of incorporation with the state. They are: A written legal document that defines ownership, conditions, and operating procedures Must create corporate bylaws State usually provides the form to fill out Must name a board of directors (they make major policy and financial decisions) CORPORATION http://www.sos.wa.gov/_assets/corps/LLC2010.pdf SPECIALIZED PARTNERSHIPS AND CORPORATIONS Limited Liability Partnership : identifies some investors who cannot lose more than the amount of their investment Joint Venture: a unique business organized by two or more other businesses to operate for a limited time and for a specific project S-Corporation: of fers limited liability of a corporation. All income passed through to owners based on their investment and taxed on their individual tax returns Limited Liability Corporation: provides liability protection. No articles of incorporation or bylaws are needed. Simpler set of organization/operating requirements than a corporation Nonprofit Corporation: group of people, joined together to do an activity that benefits the public. Free from corporate income tax. Must organize as a corporation though. COOPERATIVES AND FRANCHISES Cooperative: owned by members, serves their needs, and managed in their interest. A consumer cooperative is formed to help purchase goods/services cheaper Franchise: written contract giving permission to operate a business to sell products and services in a set/particular way. Maintains day to day operations and receives profits. Pays a fee and percentage of profits to the franchiser in return for operating assistance KEY CONCEPTS 1. The form of ownership that gives one person sole control over all business decisions is the: a. proprietorship b. partnership c. corporation d. franchise 2. True or False: All investors in a general partnership have full liability for the debts of the business. 3. The people who make the major policy and financial decisions in a corporation are the: a. investors b. board of directors c. managers d. owners KEY CONCEPTS CONTINUED 4. A special form of business organization that combines advantages of a corporation and a partnership is a: a. franchise b. nonprofit corporation c. cooperative d. limited liability company 5. On your paper….a little scenario for you. Two friends want to open a store to sell the work of local artists. They have asked you to explain the advantages and disadvantages of the THREE common forms of business ownership (yesterday’s lesson). Write a memo/letter to them outlining the advantages and disadvantages. Include a list of questions that might help your friends make a decision. CLOSING In your notes: write a brief description of the THREE common forms of business ownerships WITHOUT looking at your notes. Compare with your neighbors. INTERNET WORK Use the internet to determine the following (U.S Census Bureau website) See what you can find out about business Can you find information/statistics on the three main forms of business? Can you find the information for our state? Record all information and statistics you find so we can share and discuss as a class.