Business Structures (+/-)

     All businesses can be divided into three main types: proprietorship, partnerships, and corporations. They have many similarities and differences but they are all needed to build our economy.

Proprietorship

     The simplest form of business is proprietorship, which are owned and managed by a single individual who receives complete profit. Bakeries, barber shops, and bike repair shops are all examples of proprietorship. Proprietorships are easy to startup, have few regulations, and are easy to discontinue, but proprietorships face many problems such as unlimited personal liability, limited resources, and lack of permanence.

Partnership

     Partnerships are more complicated than proprietorships because they are owned by two or more people who must agree on specific divisions of profits and responsibilities. Small retail stores, doctors, lawyers, and dentists are all examples of partnerships. Partnerships are relatively easy to startup and have a larger pool of capital compared to proprietorships. They face dangers of unlimited liability and potential conflicts that can divide their business.

Corporation

     The largest form of business is a corporation. A corporation is a legal entity that is owned by individual stockholders who face limited liability for the firm’s debts. Supermarkets, car manufacturers, and high tech companies are all examples of corporations. Corporations have limited liability, can sell shares to raise capital, and have a long life. They are difficult to start, face double taxation and more legal requirements, and the founders can lose control of the business.

Business Franchise

     Other forms of businesses include business franchises. In a business franchise, each store is a semi-independent business that pays the parent organization. Fast food restaurants and day care centers are examples of business franchises. They provide management training, equality, national ads, financial assistance, and buying power. On the other side, they must pay high royalty fees, have strict operating standards, purchasing restrictions, and a limited product line.

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Comments
  1. rae says:

    Good examples and pictures 🙂

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