types of busines organizarion
1. sole proprietorship
2. partnership
3. corporation
sole proprietorship
unincorporated business owned and run by a single person
advantages of sole proprietorship
-ease of start-ups
-owner receives all profits
disadvantages of sole proprietorship
-owner has unlimited liability-requirement that owner is personally and fully responsible for all losses and debt of a business
-hard to raise capital
two types of partnership
-general
-limited
partnership
unincorporated business owned by 2 or more people
limited partnership
form of partnership where 1 or more partners are not active in the daily running of the business and where liability for the partnership's debt is restricted to the amount invested in the business
articles of partnership
a written agreement made by partners in forming their business
partnership advantages
-ease of start-up
-ease of management
partnership disadvantages
-partners are responsible for each other
-partner-to-partner conflict
corporation
business created under a government charter
advantages of corporation
-ease of raising capital
-owners gave limited liability-advantage of a corporation allowing a stockholder no legal responsibility for its debt beyond the sum invested
disadvantages of corporation
-charter expensive
-corporate income is taxed twice
common stockholders
1. receives one vote per share
2. elect board of directors
3. hire professional management to run business
preferred stockholder
1. receive 1st right to dividends
2. have a higher claim on assets if corporation fails
3. now voting members
proxy
written authorization instructing others how to vote at a stockholders meeting
types of corporation
1. s crop
2. non-profit
3. government-owned
4. franchise
5. cooperative
s corp
business that enjoys advantages of a corporation w/o corporate taxes
non-profit
economic institution that operates like a business but does not seek financial gain
government-owned
one that has been created to provide service that private enterprise is unable or unwilling to offer
franchise
a license to operate an individually owned business a specific geographic area as if it were part of a large chain
cooperative
nonprofit association performing some kind of economic activity for the benefits of its members
bankruptcy
court-granted permission to an individual or business to cease or delay payment on some or all debts for a limited amount of time
charter
written government approval to establish a corporation
stock
Certificate of ownership in a company.
stockholder
Person who owns shares in a corporation.
dividend
Check paid to stockholders, representing portion of corporate profits.
bond
Formal contract to repay borrowed money at regular future intervals.
principal
Amount borrowed when getting a loan or issuing a bond.
interest
Payment made for the use of borrowed money.
double taxation
Feature of taxation that allows stockholders' dividends to be taxed botha s a corporate profit and as personal income.
net income
Measure of business profits determined by subtracting all expenses, including taxes from revenues.
nonprofit organization
Economic institution that operates like a business but does not seek financial gain.
unlimited liability
Requirement that owner is personally responsible for all losses and debts of a business.
credit union
Nonprofit service cooperative that accepts deposits, makes loans, and provides other financial services.
chamber of commerce
Nonprofit organization of local businesses whose purpose is to promote their interest.
income statement
Report showing a business's sales, expenses, and profits for a certain period.
limited life
Situation in which a firm legally ceases to exist when an owner dies, quits, or a new owner is added.
depreciation
Gradual wear on capital goods during production
better business bureau
Business-sponsored nonprofit organization providing information on local companies to consumers.
collective bargaining
Process negotiation between union management representing over benefits, pay, and job-related matters.
franchise
A license to operate an individually owned business in a specific geographic area as if it were part of a large chain.
proxy
Written authorization instructing others how to vote at a stockholder meeting.