PRESENTATION ON : PRESENTATION ON FORMS OF BUSINESS OWNERSHIP Presented to : Presented to Course co-ordinator:
Mrs.Umme Kulsum Requirements Of Starting a Business : Requirements Of Starting a Business Capital requirements
Tax liability Forms Of Business Ownership : Forms Of Business Ownership Sole Proprietorship : Sole Proprietorship Sole proprietorship is a ‘One Man Show’ where an individual by his cleverness, courage,, ability, honesty, education and co-operation tries to make business a success.
Most common in---
Agriculture Advantage of Sole Proprietorship : Advantage of Sole Proprietorship Easy and inexpensive to create. No formal action is required.
Owner makes all business decision.
The owner receives all profits.
The owner utilizes his ability in full to survive.
Business itself pays no taxes.
No legal compliments at the time of dissolving business.
The owner has complete authority over all business activity. Disadvantage of Sole Proprietorship : Disadvantage of Sole Proprietorship .
Difficult for a single individual to raise a huge amount of capital.
The owner has unlimited liability for losses, debts and other liabilities the business might develop.
Nobody have all the skills as like as controlling, organizing, marketing, and financial and customer relations to manage business.
Difficulty hiring and keeping high-achievement employees.
Wrong decisions cause disaster to his business fortunes.
The death of owner dissolves the business.
Limited expertise in all areas. Partnership : Partnership A form of business ownership in which two or more people share the assets, liabilities, and profits.
Partnership offers the benefit of combined finances as well as combined talents. Types Of Partnership : Types Of Partnership General partnership: A partnership in which at least one partner has unlimited liability; a general partner has authority to act and make binding decisions as an owner.
Limited partnership: A partnership with at least one general partner, and one or more limited partners who are liable for loss only up to the amount of their investment. Partnership Agreement : Partnership Agreement Name of the business partnership.
Type of business.
Location of the business.
Expected life of the partnership.
Name of the partners and the amount of each one’s investment.
Procedures for distributing profits and covering losses.
Amounts those partners will withdraw for services.
Procedure for withdrawal of funds.
Duties of each partner.
Procedures for dissolving the partnership. Advantage Of Partnership : Advantage Of Partnership Partnership is inexpensive to create.
Shared decision making and management responsibilities
Easier to raise capital than in a sole proprietorship.
Few government regulations.
Business losses are shared by all partners.
partners can share ideas
Partners can secure investment capital more easily and in greater amounts.
Flexibility to respond to changing business conditions.
Relative freedom from government control.
No special taxes Disadvantage Of Partnership : Disadvantage Of Partnership Each owner has unlimited liability
Each partner has “agency power”
Business ends when any partner withdraws
Partnerships may lead to disagreements
Some entrepreneur are not willing to share responsibilities and profits
Some entrepreneurs fear being held legally liable for the error of their partners.
Hard to leave or end partnership Corporation : Corporation A business that is chartered by a state and legally operates apart from its owner. Slide 14: Type Description
Private Attempts to earn a satisfactory profit
Public Owned and run by the government.
Closed Stock held by only a few owners and not actively sold on the stock market.
Open Stock held by numerous people and actively sold on the stock market.
Municipal Cities and townships that carry out business.
Domestic Incorporated in one state or country and doing busines within that state or country.
Foreign Incorporated in one state or country and doing business in another country or state.
Alien Incorporated in one nation and operating in another Nation
Nonprofit Service organization incorporated for limited liability status.
Single Incorporated to escape high personal income tax rate. Crating a corporation: : Crating a corporation: Pick a name
Write articles of organization
Pay fees and taxes
Have an organizational meeting
Adopt by – laws, elect directors, pass operating resolutions. Corporate Structure : Corporate Structure Stock holders
Own the corporation
Can sell or transfer shares at any time.
Entitled to receive profits in the form of dividends.
Board of directors
Elected by stockholders
Govern the firm
Carryout the goals and policies set by the board. : Directors Officers (Top Management) President Vice Treasurer Secretary
President Stockholders Organizational Structure of Corporations Advantage of corporation : Advantage of corporation Can raise money by issuing shares of stock.
Offers owners limited liability.
People can easily enter or leave the business by buying or selling their share of stock.
The business can hire experts to professionally manage each aspect of the business. Disadvantage of corporation : Disadvantage of corporation Formation is complex.
Legal assistance is needed to start a corporation.
Start up is costly.
A lot of paperwork is involved in running a corporation.
Income is taxed twice.
Accounting and record keeping are intricate. Mergers : Mergers Combining two or more business enterprise into a single entity is merger.
Horizontal merger: A merger involving competitive firms in the same market.
Vertical merger: A merger in which a firm joins with its supplier.
Conglomerate merger: A merger involving firms selling goods in unrelated markets. Franchising : Franchising Franchise: the right to use a specific business name and sell its good or services in city, region, or country.
Each franchise operates as an independent business.
License to use an established brand.
Use is very restrictive-many role to be followed.
provide a proven successful business format. Slide 22: Franchising: A system for selective distribution of goods and services under a brand name through outlets owned by independent business owners.
Actual granting of a franchise Slide 23: Franchisee: the independent owner of a franchise outlet who enters into an agreement with a franchisor.
Supplies labor and capital.
Operates the franchised business.
Agrees to abide by the franchise agreement. Slide 24: Franchisor: The licensing company in the franchise arrangement.
Supplies a known and advertised business name.
Supplies management skills.
Supplies training and materials.
Supplies method of doing business. Advantage of Owning a Franchise Business : Advantage of Owning a Franchise Business An established product or service is being provided.
Franchisors often offer management, technical, and other assistance.
Equipment and supplies may be less expensive.
A guarantee of consistency attracts customers. Disadvantage of Owning a Franchise Business : Disadvantage of Owning a Franchise Business The cost of franchises may be high, which can reduce profits.
Franchise owners are limited in the decisions they can make regarding the business.
The performance of other franchises impact on the franchisee.
The franchise agreement may be terminated by the franchisor. TYPES OF FRANCHISE : TYPES OF FRANCHISE Main types of Franchise: Product Distribution Franchise
Business Format Franchise
Management Franchise Slide 28: TYPES OF FRANCHISE Main types of Franchise: Product Distribution Franchise
Business Format Franchise
Management Franchise Top 10 Franchises for 2011 : Top 10 Franchises for 2011 Hampton Hotels [Mid-priced hotels]
Ampm [Convenience store & gas station]
McDonald's [Hamburgers, chicken, salads]
7-Eleven Inc. [Convenienc]
Supercuts [Hair salone store]
Days Inn [Hotels]
Vanguard Cleaning Systems [Commercial cleaning]
Servpro [Insurance/disaster restoration & cleaning]
Subway [Submarine sandwiches & salads]
Denny's Inc. [Full-service family restaurant]