8.1 Entrepreneurs 8.2 Sole Proprietorships and Partnerships 8.3 Corporations and Other Organizations

Transcription

1 CHAPTER 8 Businesses 8.1 Entrepreneurs 8.2 Sole Proprietorships and Partnerships 8.3 Corporations and Other Organizations 1 CONTEMPORARY ECONOMICS: LESSON 8.1

2 Consider CHAPTER 8 Businesses Why do some people want to call themselves boss? Why start a business if most new businesses don t last five years? What does your summer lawn-mowing operation have in common with General Motors? What do Corp. or Inc. in a company s name tell you about how the owners treat debt? How could it be possible that most U.S. businesses have no paid employees? 2 CONTEMPORARY ECONOMICS: LESSON 8.1

3 Objectives LESSON 8.1 Entrepreneurs Understand the role of the entrepreneur in a market economy. Differentiate entrepreneurs from people who perform a limited entrepreneurial role. 3 CONTEMPORARY ECONOMICS: LESSON 8.1

4 Key Terms LESSON 8.1 Entrepreneurs financial capital innovation 4 CONTEMPORARY ECONOMICS: LESSON 8.1

5 Role of Entrepreneurs Profit-seeker Risk-taker Visionary 5 CONTEMPORARY ECONOMICS: LESSON 8.1

6 Entrepreneurs and Creative Change Introduce new products Improve quality of existing products Introduce new production methods Introduce new ways of doing business 6 CONTEMPORARY ECONOMICS: LESSON 8.1

7 Financing the Business Financial capital is the money needed to start or expand the business. Sources of financing Banks Venture capitalists Savings 7 CONTEMPORARY ECONOMICS: LESSON 8.1

8 Profit Attracts Competitors Other businesses will enter the market and try to duplicate the success of the original entrepreneur The pursuit of profit can lead to a chain of events that creates new and better products, higher quality, and lower prices 8 CONTEMPORARY ECONOMICS: LESSON 8.1

9 Who Isn t an Entrepreneur? Invention, innovation, and entrepreneurs Managers and entrepreneurs Stockholders and entrepreneurs 9 CONTEMPORARY ECONOMICS: LESSON 8.1

10 LESSON 8.2 Objectives Sole Proprietorships and Partnerships Describe the advantages and disadvantages of sole proprietorships. Describe the advantages and disadvantages of partnerships. 10 CONTEMPORARY ECONOMICS: LESSON 8.2

11 LESSON 8.2 Key Terms Sole Proprietorships and Partnerships sole proprietorship liability partnership general partnership limited partnership 11 CONTEMPORARY ECONOMICS: LESSON 8.2

12 Sole Proprietorship Sole proprietorship simplest form of business organization; a firm that is owned and managed by one person, but sometimes hires workers. 12 CONTEMPORARY ECONOMICS: LESSON 8.2

13 Who Is a Sole Proprietor? About three quarters of all businesses in the United States are owned by sole proprietors. Nearly all sole proprietorships are small. 13 CONTEMPORARY ECONOMICS: LESSON 8.2

14 Distribution of Sole Proprietorships Based on Annual Sales 14 CONTEMPORARY ECONOMICS: LESSON 8.2

15 Distribution of Sole Proprietorships by Industry 15 CONTEMPORARY ECONOMICS: LESSON 8.2

16 Advantages of Sole Proprietorships Easy to start Few government regulations Complete control Owner keeps all profit Lower taxes Pride of ownership 16 CONTEMPORARY ECONOMICS: LESSON 8.2

17 Disadvantages of Sole Proprietorships Unlimited personal liability Difficulty raising financial capital Limited life Difficulty finding and keeping good workers Unlimited responsibility 17 CONTEMPORARY ECONOMICS: LESSON 8.2

18 Partnerships A partnership involves two or more individuals who agree to contribute resources to the business in return for a share of the profit. 18 CONTEMPORARY ECONOMICS: LESSON 8.2

19 Types of Partnerships General partnership partners share both in the responsibility for running the business and in any liability from its operation Limited partnership at least one partner is required to be a general partner 19 CONTEMPORARY ECONOMICS: LESSON 8.2

20 Advantages of Partnerships Easy to start Few government regulations Shared decision making and increased specialization Greater ability to raise financial capital More able to attract and retain workers Lower taxes 20 CONTEMPORARY ECONOMICS: LESSON 8.2

21 Disadvantages of Partnerships Unlimited personal liability Limited life of the business Partners may disagree Profits must be shared 21 CONTEMPORARY ECONOMICS: LESSON 8.2

22 LESSON 8.3 Objectives Corporations and Other Organizations Describe how a corporation is established. Understand why the corporate form is favored by large businesses. Recognize other types of organizations businesspeople use to accomplish their goals. 22 CONTEMPORARY ECONOMICS: LESSON 8.3

23 LESSON 8.3 Key Terms Corporations and Other Organizations corporation articles of incorporation private corporation publicly traded corporation S corporation limited liability company (LLC) limited liability partnership (LLP) cooperative not-for-profit organizations 23 CONTEMPORARY ECONOMICS: LESSON 8.3

24 Incorporating A corporation is a legal entity with an existence that is distinct from the people who organize it, own it, and run it. 24 CONTEMPORARY ECONOMICS: LESSON 8.3

25 Comparing Corporations with Sole Proprietorships and Partnerships 25 CONTEMPORARY ECONOMICS: LESSON 8.3

26 Articles of Incorporation Articles of incorporation are a written application to a state seeking permission to form a corporation A charter offers the legal authorization to organize a business as a corporation 26 CONTEMPORARY ECONOMICS: LESSON 8.3

27 Types of Corporations Private corporation Publicly traded corporation 27 CONTEMPORARY ECONOMICS: LESSON 8.3

28 Advantages of Incorporation Easier to raise financial capital Limited liability Unlimited life Specialized management 28 CONTEMPORARY ECONOMICS: LESSON 8.3

29 Disadvantages of Incorporation Difficult and costly to start More regulated Owners have less control Double taxation 29 CONTEMPORARY ECONOMICS: LESSON 8.3

30 Other Organizations Hybrid businesses Cooperatives Not-for-profit organizations 30 CONTEMPORARY ECONOMICS: LESSON 8.3

31 Hybrid Businesses S corporation combines the limited liability protection of the corporate form with the single taxation feature of a partnership Limited liability company (LLC) combines the limited feature of the corporation with the single-tax provisions of a partnership Limited liability partnership (LLP) has the advantages of an LLC and is more easily converted from an existing partnership 31 CONTEMPORARY ECONOMICS: LESSON 8.3

32 Cooperatives A cooperative is a group of people who pool their resources to buy and sell more efficiently than they could independently. Consumer cooperative a retail business owned and operated by some or all of its customers in order to reduce costs Producer cooperative producers join forces to buy supplies and equipment and to market their output 32 CONTEMPORARY ECONOMICS: LESSON 8.3

33 Not-for-Profit Organizations Not-for-profit organizations engage in charitable, educational, humanitarian, cultural, professional, and other activities, often with a social purpose. Revenues typically include some combination of voluntary contributions and service charges. 33 CONTEMPORARY ECONOMICS: LESSON 8.3