Business organization

March 7, 2013
 More formal/complex than a proprietorship (one owner)
 Partnership agreement : a written agreement among ALL
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
 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?
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
 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.
 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
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
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.
 In your notes: write a brief description of the THREE common
forms of business ownerships WITHOUT looking at your notes.
Compare with your neighbors.
 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
 Can you find the information for our state?
 Record all information and statistics you find so we can share and
discuss as a class.