pump primer define the term entrepreneur.define the term entrepreneur. explain the difference...
TRANSCRIPT
Pump Primer
• Define the term entrepreneur.
• Explain the difference between sole proprietorship, partnership, & corporation.
CHAPTER 7
CHAPTER 7
Forms of Business Ownership
Objectives:• Define entrepreneur, sole proprietorship, partnership, &
corporation• Compare the advantage and disadvantages of organizing a
business as a corporation, partnership, or sole proprietorship.• Explain limited liability.• Describe the Scriptural principles that apply to Christians
involvement in partnerships.• Define and describe two types of corporation• Explain the significance of stock to a corporation.• Give examples of laws and regulations that affect how corporations
and other forms of businesses are formed and operate.
CHAPTER 7
Biblical Integration:
• In order for a Christian entrepreneur to be successful in God's eyes, they must be diligent in all areas of their business.
CHAPTER 7
Forms of Business Ownership
• Sole proprietorship• Partnership• Corporation
CHAPTER 7 p. 128
Sole Proprietorship
• One owner• Most popular form of business ownership
CHAPTER 7 pp. 129-131
Sole Proprietorship
• Advantages:• freedom to enter and exit the market easily• freedom from outside control• freedom to retain information• freedom from paying excessive taxes• freedom from being an employee
CHAPTER 7 pp. 129-131
Sole Proprietorship
• Disadvantages:• unlimited personal financial liability• limited management and employee skills• limited life• limited availability of money
CHAPTER 7 pp. 129-131
Partnership
• Business enterprise with two or more owners
• Least popular form of business ownership
CHAPTER 7 pp. 131-135
Partnership
• Questions:• Who are the partners?• What is each partner responsible to do?• How are profits to be divided?
CHAPTER 7 pp. 131-135
Partnership
• Questions:• How may a partner withdraw from the
partnership?• How can the partnership be dissolved?
CHAPTER 7 pp. 131-135
Partnership
• Advantages:• greater management skills• greater retention of competent employees• greater sources of financing• ease of formation and freedom to manage
CHAPTER 7 pp. 131-135
Partnership
• Disadvantages:• unlimited personal financial liability• uncertain life• conflicts between partners
CHAPTER 7 pp. 131-135
Partnership
• Limited partnerships• at least one general partner
• unlimited personal financial liability• makes most business decisions
CHAPTER 7 pp. 131-135
Partnership
• Limited partnerships• at least one limited partner
• shares in profits• no management responsibilities• personal financial liability limited to the
amount of his investment
CHAPTER 7 pp. 131-135
Partnership
• Scripture and partnerships• “unequal yoking”• surety
• act of becoming security for or pledging to undertake another’s debt
CHAPTER 7 pp. 131-135
Incorporation
• In a corporation, the business is its own organization, independent of and separate from the owners• separate entity
CHAPTER 7 pp. 135-140
Incorporation
• Types of Corporations• private corporations: owned by private citizens• public corporations: owned by the general
public and managed by the government• TVA, Amtrak
CHAPTER 7 pp. 135-140
Incorporation
• Ownership of a corporation• buying shares of stock
CHAPTER 7 pp. 135-140
Incorporation
• Advantages• limited personal financial liability of
stockholders• experienced management and specialized
employees
CHAPTER 7 pp. 135-140
Incorporation
• Advantages• continuous life• ease in raising financial capital
CHAPTER 7 pp. 135-140
Incorporation
• Disadvantages• higher taxes• greater governmental regulation• lack of secrecy• impersonality• rigidity
CHAPTER 7 pp. 135-140
Other Types
• S Corporation• Limited Liability Company (LLC)
CHAPTER 7 pp. 135-140
S Corporation• Profits and losses are not taxed at the corporate level• Earnings are reported on the owner’s personal tax returns in
much the same way as sole proprietorships and partnerships.• Limited to one class of stock and shareholders are limited in
number and by U.S. residency.• Limited liability• Easier to raise capital and to transfer ownership• No corporate taxes, but have regulations just like a corporation.
CHAPTER 7 pp. 135-140
BUSINESS ABBREVIATIONS
• Ltd. (Limited Liability)*• PC (Professional Corporation)*• LLC (limited liability Company)*• SA (Anonymous Society)* • p.l.c. (Publicly Limited Company)*• Inc. (Incorporation)*
* These abbreviations reflect the legal separation of owners and the corporations.
• Corp. (Corporation)• Co. (Company)
• Break-up into groups of two or three.
• Look over the list of companies and place them into the correct category of business types.
ACTIVITY 1
ACTIVITY 2Using your textbook and lecture notes
complete the chart with your partner(s).
• Define the term, then list all of the advantages and disadvantages for each form of business.