Business Types Flashcards
(17 cards)
A person who attempt to earn money and make profits by taking the risk of owning and operating a business.
entrepreneur
a business owned and operated by one person, most uncommon form of business. unlimited liability
sole proprietorship
what are the advantages of a proprietorship?
Owner is boss
Owner receives all profits
Owner personally knows employees and customers
Owner can act quickly in decision making
what are the disadvantages of a propritorship?
Owner may lack special skills and abilities
Owner may lack funds
Owner bears all losses
Illness or death may close the business
A business owned by two or more persons, General Partnerships, Unlimited liability, Limited Partnerships
Partnership
advantages of a partnership?
Skills and abilities pooled Sources of capital increased Credit position improved Shared responsibilities Decreased risk
disadvantages of a partnership?
Unlimited financial liability for all debts of the business
Disagreement among partners
Actions are legally binding
Business is dissolved if one partner dies
a business that is chartered by a state and legally operates apart from the owner. the value of this business is divided into equal units called shares of stock
corporation
three key people in corporations
stockholders, officers, directors
Represented by ownership of shares of stock
stockholders
Ruling body of the corporation, Elected by the stockholders, Develop plans and policies to guide the corporation, Most large firms – 10 to 25, Majority are from outside the corporation
directors
The top executives who are hired to manage the business, Appointed by the Board of Directors, President, Secretary, Treasurer, CEO, CFO
officers
advantages of corporations:
Ease of raising money for expansion
Limited liability of stockholders
Permanency of existence
Ease in transferring ownership – buy or sell stock
disadvantages of corporations:
Taxation
Higher taxes on the profits of the corporation and on each stockholder
Government regulations
Complicated accounting and record keeping
Complexity of forming a corporation
A written contract granting permission to sell someone else’s product or service in a prescribed manner, over a certain period of time, and in a specified territory.
franchise
]advantages of a franchise
Be your own boss Get a head start Gain additional training and assistance Profit from name recognition Take advantage of national advertising
disadvantages: of a franchise
You must play by the rules
Limits choices
Start-up costs
