Business Organization

Okay. Hey, Intro the business Coach Thomas, listen, we are

still in business organization.

The first section we talked about business in the U.

S. Economy.

Now we're going to talk about the forms of business

ownership. So these are our task for today.

We're gonna understand the three major forms of business ownership.

We're gonna determine when each form of business ownership is

most appropriate.

And I'm gonna try to show you that in pros

and cons of each and then we're gonna recognize other

specialized business ownership forms.

Thes are your key terms.

So proprietorship Partnership Corporation, Partnership Agreement, articles of incorporation and

lastly franchise.

So go ahead and get your pens and paper.

Take notes on this.

Here we go.

Oh, many people think they would like to own a

business. You know your own a business.

You have the chance to be in control, make decisions.

Oh, you invest the money to make a profit toe

all challenging work.

But it's exciting work.

Oh, there are many people who are business owners.

The amount of control they have, how decisions are made.

The source of money for the business, the control over

profits. It's not the same for each and every owner,

though, depending on the specific type of business.

All right.

And so the three major forms of business, that's what

we're going to get into the first one is so

preparatory Worship.

The second one is partnership, and the third is corporation.

Oh, purport to shoot.

It's just owned by one person.

73% of our businesses are proper order ships.

There are 23 plus million in the US.

Alright, and 67% of these make less than 25 k.

All right, so you think about a bike shop?

Um, a barber Gardner Bakery.

These are examples of soap operas.

Leadership? Yeah, it's Secondly, you got a partnership now.

This is when two or more people have entered into

agreement and they own and control this business.

You know, it's kind of similar to the sole proprietorship

in several ways.

It's Oh, and we'll talk about that, you know, later

on in this section.

But the these owners, they're responsible for everything.

All right.

8% of all businesses are partnerships.

There are 2.2 million and you in the US.

And so, uh, examples of these are doctors offices, lawyers,

accountants a big example.

I know all of you probably have heard O N

s t is the way to go called 68370 it

is T is a partnership.

Alright, so I just wanted to give you that example.

And these people, they have to enter into partnership agreement,

which is the key term that we gave it the

beginning and then last.

You have the corporation.

Now there are separate legal entity, you know, they're formed

by documents.

A lot of documents with state.

All right, so it is owned by one of more

shareholders and managed by a board of directors.

All right, 5% of these businesses exists and 62% get

all revenues.

And so walmart, Disney ups Wells Fargo.

If you look at that picture on this presentation shows

all different big time large companies and organizations that exists.

Nike. Oh, these are corporations.

So how do you choose which business ownership to go

into? All right, So and that's what we're going to

talk about now for prop priority ship.

There are some pros.

You've got full control.

Start up costs a love like for business license I

think it's like $30 or something here in Memphis, relatively

few regulations, so you don't really have too many rules

and regulations.

When you go into business for yourself, you receive all

the profits off.

The taxation is an advantage.

All the income is taxed as part of your personal

income, and then it's easy to discontinue.

The cons with it, though, is unlimited liability limited capital

for expansion and lack of permanence.

All right, so these things on the things that you

have to consider when it comes to so proper order

ship rows of a partnership, is kind of similar to

proper Watership.

They have low start up costs as well.

You have shared decision making and specialization, complimentary qualities.

That's the thing that I like about partnerships and teamwork.

I'm a team guy that if I'm not getting something,

my teammate or my partner just might be good at

something. Eso that's a pro larger pool of assets you

can can lead to expansion, and then taxation is the

same way.

It's so prepper order shit A ZX personal income and

the cleanse for partnership is unlimited liability and the potential

of conflict now potential conflict.

That's the thing where you can't see out of I.

Things are going well.

It's kind of hard When you have a conflict, Quit

your partner.

All right, so those are the cons for partnership and,

lastly, a corporation.

You have limited liability, capital investment and expansion easy with

stock offering.

So stocks come into play when it comes to corporation

people by until your company with stops.

And so expansion and investment could be a lot better.

Stockholders do not carry, however, responsibility for corporations actions.

So I could buy stock into Nike.

But I won't be responsible for what the Nike does.

And it's easy to raise money to purchase capital.

And they have a long life.

And these are the guns for corporations difficult, and it's

expensive to start up.

All right, so you got a list of paperwork you

got a foul articles of incorporations with your state.

You gotta have corporate bylaws, which are those operating procedures

for the corporation.

And then you gotta have a board of directors who

are the people who make the major policy and financial

decisions for the business.

So that's a lot of energy itself.

There's double taxation corporate tax and an individual tax thing

with the corporation is, uh it acts as if it

is a person.

So just like we all have Social Security numbers, a

corporation has a form of Social Security number, and it's

called, uh, E I N number.

All right, An employee identification number.

All right.

And then you got loss of control, which we talked

about. The stakeholders are really the ones have a lot

of say so in control with their purchase of stock.

And then you have more rules and regulations.

So what other forms of ownership are there?

I mean, and they have specialized forms of partnerships.

They have unique forms called cooperatives and Franchising.

So specialized partnerships and corporations.

I'm sure you have maybe heard of some of these.

All right, so in a general partnership, our partners take

apart and ownership and operation of the business.

A limited liability partnership identifies some investors who cannot lose

more than the amount of their investment, but they're not

allowed to participate in the day to day management of

business. Alright, So a limited liability partnership is kind of

difficult and costly to set up a joint venture is

a unique business organized by two or more other businesses.

Toe operate for only a limited time and for specific

projects. Alright, So a joint venture is a type of

partnership is, well, a corporate form that is favored by

many small business is the S corporation now s corporation

office. The liability, the limited liability of a corporation.

You know, all the income has passed through to the

owners based on their investment and its tax on their

individual tax return.

So I'm just giving you a little bit of information

of all five.

A new ownership form is the limited liability, a company

which is L.

C. I'm sure you've heard of that.

Oh, it combines the best features of a partnership and

a corporation.

It also provides liability protection for owners.

All right.

It is like a simpler set of organ organizing and

operating requirements for a corporation.

There is no articles of incorporation on bylaws needed a

a simple document, like a partnership agreement.

It's all basically that's developing a l l c.

And then lastly, I know you've heard of Nonprofit Corporation,

which is a group of people who joined to do

some activity that benefits the public, you know, like they

work in areas of education, health care, charity, the arts.

Um, they are free from corporate income tax.

You know, they could raise funds by receiving grants and

donations from people like you and me and businesses.

ST. Jude is one big one that I really like.

Uh, I always donate with them.

So that's that's a form of non profit organization American

Heart Association, Susan G.

Komen for breast cancer.

All those air nonprofits.

And, as with other corporations, you know Oh, they must

organize as a corporation.

So a nonprofit more organized as a corporation, and the

government must approve their purpose and operation.

And then you have co operatives and franchises.

Sometimes a group of people form a cooperative to provide

goods and service is that they all need.

All right, So basically a cooperative is owned by members.

They serve their needs and it is managed in their

interest. Alright.

These members, they form a consumer cooperative so that they

can purchase goods and service is more cheaply as a

group. Then they could individually, So you don't hear too

much about cooperatives as much.

But you do hear much about a franchise.

I'm sorry.

Franchise is a written contract granting permission to operate a

business to sell products and service is in a set

way. So McDonald's, Burger King subway, Dunkin Donuts, Denny's like

the picture.

These are all franchise.

The company that owns the product or service and grant

the rights to another business is known as the franchise

Earth. So I'm sorry.

McDonald's. They are the franchise Earth.

The company purchasing the rights to run the business is

the franchise e All right.

So it's kind of it can be kind of confusing,

but I don't want it to be confusing, but basically

I can be a franchise e.

I could go in and I could go into MacDonalds

and own my own McDonald's.

Oh, but there are pros and cons to it as

well. Crows of having a franchise.

You have a built in reputation brand recognition.

Everybody knows what McDonald's is.

Everybody knows Burger King management and training support.

So these places these franchisors, they offer those things like

chick fil a standardized quality.

You got national advertising and you got buying power cons

For our hi franchise and royalty fees, you have to

pay a set amount to the franchisor.

Strict operating standards, purchasing restrictions and limited product line.

All right, so quite a quite a mouthful when it

comes to oh, business owner shoot.

But I did want to give you that bit of

information, because I know some of you are entrepreneurs Some

of you want on your own businesses.

And this is something that is unique for all of

you to know.

And that's wraps up section two.

You guys have a good day.

Yes. Okay.

I'm like, Okay.

Business Organization

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