This document discusses different types of business organizations including sole proprietorships, partnerships, and corporations. It notes the pros and cons of each structure and provides examples. It specifically discusses double taxation that can occur with corporations and the liability risks of sole proprietorships and partnerships if they are sued. The document also mentions forming articles of incorporation and the differences between common and preferred stock.
4. Risk vs. Reward
How likely is my business to cause harm?
Liability
Responsibility for risks
5. Sole Proprietorship
Single person
2 positives, 2 negatives
Good for: low liability, low entry costs
Benefits: single person has all control and keeps
all profits
Drawbacks: single person assumes all risk,
hard to raise capital
Examples: small construction firms,
artistic firms, bloggers, import/export
6. Partnerships
Two or more people in business together
2
positives, 2 negatives
Good for: low liability
Benefits: low entry costs, shared costs
Drawbacks: partners assume all risk
hard to raise capital,
agreements “like a marriage”
Examples: law firms, small specialized firms
8. Liability
If your Sole Proprietorship or
Partnership is sued…
They can take:
Your house
Your car
Your money in the bank
Your future money!!!
11. Corporation
A legal “person”
Good for: higher liability
Benefits: owners protected
easier to raise capital
Drawbacks: double taxation
increased regulation
Examples: restaurants, LLC’s,
Sports Franchises
12. Double taxation
Corporation pays its own taxes: 25-35%
Corporation pays employees wages/salary
Employees ALSO pay taxes: 20-38%
Trade off is less liability more tax
13. 2 types of Corporations
Privately held – owned by founders or
owners
Publicly held – owned by shareholders
15. On a full sheet
Bellringer
1. OPTIC for this graph
Source: Forbes Magazine 2011
16. Which of the 3 business orgs
would you use to start a…..
17. Which of the 3 business orgs
would you use to start a…..
18. Which of the 3 business orgs
would you use to start a…..
19. Which of the 3 business orgs
would you use to start a…..
20. Which of the 3 business orgs
would you use to start a…..
Tile setting
21. Which of the 3 business orgs
would you use to start a…..
22. Which of the 3 business orgs
would you use to start a…..
23. Which of the 3 business orgs
would you use to start a…..
24. Which of the 3 business orgs
would you use to start a…..
25. Business Org Closure Pages 220-223
2. How hard would it be to file articles of incorporation
in the state of Arizona?
3. What is the difference between common and
preferred stock?
4. Explain how double taxation works.
5. What would you have to do if you wanted to open a
Subway franchise?
6. Compare and contrast the advantages of owning a
franchise like a Subway. 3 for each
7. Which business organization should you use to
open a restaurant? & why?
8. Which business organization should you use to
open a computer tech company? & why?
QE. Find an entrepreneur in the book who you could admire and
explain what you could learn from them. (list on page “x”)