Forms of Business
Pros and Cons
Hodge Podge
Ethics
Defintions
100
A business owned by only one person.
What is Sole Proprietorship?
100
Pros to this form of business: Owners (shareholders) enjoy limited liability: They can lose no more than the amount that they personally invest in the company. It’s easier to raise funds. It can (at least in theory) exist forever. It is able to attract more skilled and talented employees. Cons: Subject to “double taxation.” It’s more costly to set up. Subject to more regulation and government oversight. Owners and managers aren't necessarily the same people.
What is a Corporation?
100
This form of business is formed to serve some public purpose rather than for financial gain and enjoys favorable tax treatment.
What is a Not-for-profit corporation?
100
Right-versus-right decision
What is an ethical dilemma?
100
A group of people (primarily from outside the corporation) who are legally responsible for governing the corporation.
What is a Board of Directors
200
A business owned jointly by two or more people.
What is a Partnership?
200
Pros: You retain complete control over the business. You oversee all day-to-day activities and make all major decisions. You receive all profits. You don’t have to pay any special income taxes. It’s relatively inexpensive to set up and subject to few government regulations. Cons: You must supply all the talent needed to make the business a success. You must rely on your own resources for financing. You’ll be held solely responsible for any losses or debts incurred by the business. If you die, the business dissolves.
What is Sole Proprietorship?
200
Business owned and controlled by those who use its services. Individuals and firms who belong to the cooperative join together to do such things as: Market products Purchase supplies Provide services for its members
What is a Cooperative?
200
A situation in which you must choose between the promotion of your personal interest and the interest of others.
What is a Conflict of Interest?
200
Earnings that are distributed to the shareholders.
What is Dividends?
300
This Business is made up of a single person who runs the business and is responsible for its liabilities and any number of others that contribute to the business in a limited way.
What is limited partnership?
300
It brings together individuals with various talents who share responsibility for running the business. It makes financing easier (the business can draw upon the financial resources and borrowing ability of all). The business can continue. Doesn't pay any special taxes. It’s relatively inexpensive to set up and subject to few government regulations. Cons: You have to share decision making. You have to share profits. Unlimited liability: Each is personally liable not only for his or her own actions, but for those of the others. Disagreements can jeopardize the business.
What is a Partnership?
300
The corporations take steps to restrict the transfer ability of company stock. Stocks are held by a few individuals who aren’t allowed to sell it to the general public.
What is a private corporation?
300
A situation in which you must decide between being loyal either to your employer or to a friend or family member.
What is a Conflict of Loyalty?
300
The legal condition under which the owner cannot lose more than what is invested.
What is Limited Liability?
400
This form of business is considered a legal entity that’s separate from the parties which own it. It can enter into binding contracts, buy and sell property, sue and be sued, be held responsible for all its actions, and be taxed.
What is a corporation?
400
Pros: Company profits are taxed only once, when they are paid out as dividends. Owners have limited liability protection. Cons: Cannot have more than a hundred stakeholders. There is no flexibility in the way profits are divided among the owners. Profits must be allocated based on percentage ownership regardless of the individual efforts put in by the partners.
What is an S Corp?
400
These corporations have no restrictions upon sale of stock. Stocks are available for sale to the general public.
What is Public Corporation?
400
Refers to the decision making approach that an organization takes in balancing its responsibilities to its stakeholders. In more general terms, it includes the actions taken by a company to make a positive impact on society.
What is Corporate social responsibility?
400
Questions you should ask when forming a business.
What is How much control do I want? Do I want to share my profits with others? How much liability exposure am I willing to accept? What are my financing needs?
500
This form of business gives owners limited liability protection (which makes it similar to a regular corporation). Company profits are taxed only once, when they are paid out as dividends. This form of business cannot have more than a hundred stakeholders and there is no flexibility in the way profits are divided among the owners. Profits must be allocated based on percentage ownership regardless of the individual efforts put in by the partners.
What is an S Corp?
500
Pros: Members are not personally liable. Earnings are taxed only once. It can have as many members as it wants—it is not restricted to a maximum of 100 shareholders. Its members don’t have to be U.S. residents or citizens. Profits do not have to be allocated to owners based on percentage ownership. Members can distribute profits in any way they want. Doesn't have to elect a board of directors, hold annual meetings, or contend with a heavy record keeping burden. Cons: Not the best option if you plan on becoming a Publicly traded company. Newest form and laws are still going through transition.
What is Limited Liability Company?
500
These individuals own a corporation.
What is shareholders?
500
Steps to follow when facing a ethical dilemma?
What is 2. Define the problem and collect relevant facts. 3. Identify feasible options. 4. Assess the effect of each option on shareholders. 5. Establish criteria for determining the most appropriate action. 6. Select the best option based on your established criteria.
500
List all forms of business discussed in class.
What is Sole proprietorship Partnership Regular corporation S-corporation Limited-liability companies (LLC’s) Cooperatives
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