Business Organizations
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HOW BUSINESSES 
ORGANIZE
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TO MAKE MORE PROFIT

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Created with Raphaël 2.1.2
Created with Raphaël 2.1.2
Created with Raphaël 2.1.2
Created with Raphaël 2.1.2
Created with Raphaël 2.1.2
Created with Raphaël 2.1.2
Created with Raphaël 2.1.2
Created with Raphaël 2.1.2
Created with Raphaël 2.1.2Created with Raphaël 2.1.2
Created with Raphaël 2.1.2Created with Raphaël 2.1.2
The sole proprietor is a business owned by one person. The owner is solely responsible for all work and liabilites. Common businesses are restuarants, barber shops, construction and samll service related business. 70% of business in USA.

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Sole Proprietorship
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Partnerships divide the risk and profits among two or more people. Common examples are doctors, lawyers and accountants.
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Partnerships
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A legal entity owned by individual stockholders, each with limited liability for the firm's debt. Each portion of the firm is called stock. The stockholders are paid dividends for their share of profit. A board of directors is hired to run the corporation. The Board of Directors hires professionals to operate the business. 
Corporations
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The Owners share risk and profits. The liability of the business is share by all owners. 

The operators are the people that do the daily work of the business.

Most sole proprietors and partnerships are owned and operated by same people.

A corporation typically is owned by people that do not operate the business. Professionals are hired for that
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Ownership and operation of business
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The more capital that can be attracted can allow companies to scale. That means they can can better efficiency from larger and more efficient operations.

This is a corporations real advantage, they can sell stock to raise large amounts of money to grow the business and to compete more efficiently.
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Scale of business and capital investment
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Created with Raphaël 2.1.2
Advantages
  • Owner has all control
  • Easy Start up
  • Great flexibility and freedom
  • Easy to dissolve
  • Taxed once
Disadvantages
  • Limited Capital for growth
  • Unlimited liability
  • Limited lifespan
  • Long hours
Advantages
  • Pooled resources and skills
  • More capital
  • Specialization
  • Easy to start
  • Taxed once
Disadvantages
  • Shared profits
  • Less control of decisions
  • Unlimited Liability
  • Limited life span
  • Divided authority
Advantages
  • Limited liability
  • Easy to raise capital
  • Unlimited Life
  • Easy to transfer shares of stock
Disadvantages
  • Complicated legal issues
  • Decision making is slow
  • Double taxation
  • CEO can make poor decision and affect profits
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