Chapter 35: Forms of business organization. What are the major forms of business organization, and what are the differences among them? What are the specialized forms of business organization? What is a franchise?
Trang 1Forms of Business
Organization
Trang 2 Sole Proprietorship
General Partnership
Limited Partnership
Corporation
Trang 3 Definition: Unincorporated business owned by one person
Owner has total control
Owner has unlimited liability
Profits taxed directly as income to sole proprietor
Trang 4Proprietorship
Advantages
Disadvantages
Trang 5 Definition: Unincorporated business owned and operated by
two or more persons
Each partner has equal control of business
Each partner has unlimited, personal liability for business
debts/obligations
Profits taxed as income to partners
Trang 6 Advantages
Disadvantages
incurred by other partners on behalf of partnership
Trang 7 Definition: Unincorporated business with at least one general
partner, and one limited partner
General partner in limited partnership has
managerial/operational control over business
Limited partner’s liability limited to extent of his/her capital
contributions
Limited partner has no managerial/operational control over
business
Trang 8 Definition: Statesanctioned business with legal identity
separate and apart from its owners (shareholders)
Owners’ (shareholders’) liability limited to amount of
investment in corporation
Profits taxed as income to corporation, plus income to
owners/shareholders (“doubletaxation”)
“S” Corporation can avoid doubletaxation
Trang 9Advantages and Disadvantages of Corporation
Trang 10 Definition: Business organization formed under federal tax
law that is considered corporation, yet taxed like a partnership
Formed under federal law
No more than one hundred (100) shareholders
Shareholders must report income on their personal income tax forms
Trang 11 Definition: Business organization with limited liability of a
corporation, yet taxed like partnership
Formed under state law
Owners of LLC (“members”) pay personal income taxes on
shares they report
No limitation on number of owners permitted in LLC
Trang 12transferable shares, while all company goods are held in names of partners
trust for beneficiaries
project
specific business undertaking
“franchisee” (person who, by specific terms of agreement, sells goods/services
under trade name/trademark)
Trang 13(To Franchisee)
Trang 14Franchisor)
Trang 15 “ChainStyle” Business Operation
business name, and franchisor’s standard “methods and practices”)
Distributorship
area
Manufacturing Arrangement
Trang 16 Hampton Hotels
Subway
Jiffy Lube
7Eleven
Supercuts
Anytime Fitness
Servpro
Denny’s , Inc
McDonald’s
Pizza Hut