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1、工商工商导论导论Chapter课课件演示文稿件演示文稿Topics CoveredwForms of Business OrganizationswThe Advantages and Disadvantages of Different Business OrganizationswObjectives of Business OrganizationsTypes of business formsForms of Business OrganizationsBusiness can be organized as three types:Sole Proprietorship Partne
2、rship CorporationBusiness Organization Differs in terms of:Their Owners Liabilities The Life of the Entity The Ability to Raise Capital The TaxationSole ProprietorshipwA business owned and controlled by one person.It is the simplest form of business organization to start and maintain.-It is not a co
3、rporation.Small ventures can be owned and managed by a single individual such as restaurants,street grocery stores,florists,beauty saloons,drug stores etc.-The business has no existence apart from you,the owner.Its liabilities are your personal liabilities.You undertake the risks of the business for
4、 all assets owned,whether used in the business or personally owned.You include the income and expenses of the business on your own tax return.Sole ProprietorshipAdvantageswEase of Organization -simple to establish(a small fee,a few minutes and procedure)-freer in decision making(compared with other
5、business organizations,more freedom on management and operation)-easy to keep operational and financial secrecy(not necessarily report to shareholders or board)Sole ProprietorshipAdvantageswSubject to fewer government policy -Less tax burden(e.g.in the US the tax rates for sole proprietorship are of
6、ten half those for corporations)-Exclusive use of profits(being your own boss means being the boss of your own money)Sole ProprietorshipDisadvantageswUnlimited liability(the owner is personally responsible for all aspects of the business)wLimited access to capital(lack of long period relation with b
7、anks and less security guarantee mean inability to raise large amounts of moneywLimited managerial expertise(one field expert does not mean expert in every aspect of business,i.e.marketing,finance,HR,operation etc)wLife of the business is limited to the life of the proprietorship(the only way to tra
8、nsfer ownership of a sole proprietorship is to sell the entire business,otherwise,the life of the business ends when the sole proprietor dies)PartnershipwDefinition:An association of two or more people to carry on as co-owners of a business for profit.-many professional businesses,such as accounting
9、 and legal firms are partnerships.wTypes of partnership:-general partnerships(all the partners share the profits and losses of the business)-limited partnerships(the partners are not involved in the daily operations and are only responsible for losses up to the amount they contribute to the business
10、).PartnershipwFeatures:a.It can be created by an express agreement.b.The partners can be held responsible for the actions and business debts of the other partners.c.All the assets of the business are personally owned by the partners.d.Partners are not eligible for employment insurance if the busines
11、s fails-partners are not paid a salary but they can take money from the business through personal drawings.PartnershipAdvantageswEase of organizationfairly easy to establish,not expensive and complicated.wImproved access to capital and credit compared with sole proprietorship.wGreater possibility fo
12、r good management-a partnership allows two or more people to work together and bring different skills and resources to the business.wDefinite legal framework-a definite legal framework has developed for partnerships.Therefore,settling legal problems concerning partnerships is relatively simpler than
13、 solving problems of other forms of business.wBetter prospects for growth-increased capital and credit,better management and a more definite legal framework stands a better chance to survive possible setbacks and has better prospects to expand and grow.PartnershipDisadvantageswUnlimited personal lia
14、bility-because the partnership is not considered to be separated from its owners,the general partners are personally responsible for liabilities of the partnership.If the business fails,the partners will be personally responsible to pay all of the debts and obligations of the partnership.Moreover,be
15、cause each partner is an agent for the business and for the other partners,each partner is personally responsible for the actions of the other partners.wDifficult to transfer ownership-because a partnership is based on the individual partners,and it is not a separate legal entity,it is difficult to
16、buy or sell a partnership interest.Buying or selling a partnership interest will involve rewriting the partnership agreement and determining exactly how the partnership will change.wInternal conflicts-although the resolution of disagreements among partners is generally covered under a partnership agreement or case law,it usually is very difficult.Differences in opinion surely hurt the operation and well-being of the firm.wProblem of continuity-if one of the partners dies,the partnership ends.Thi
