1) What is a corporation?
A corporation is a company recognized by law as a single body with its own
powers and liabilities, separate from those of the individual
members. Corporations perform many of the functions of private business,
governments, educational bodies, and the professions.
2) The characteristics
Corporation is a legal entity, meaning it is a separate entity from its owners who
are called stockholders. A corporation is treated as a person with most of the
rights and obligations of a real person. A corporation is not allowed to hold public
office or vote, but it does pay income taxes. It may be established as a profit
making or nonprofit organization and may be publicly or privately held. The stock
of a public company is traded on a stock exchange. There may be thousands,
even millions, of stockholders in a public company.
3) The Formation
The steps of starting a corporation
1) Decide on a business name
2) Search availability of the name
3) Register the corporation name
4) Pick a place to incorporate
5) Choose directors for your corporation
6) Create and sign your corporations articles of incorporation
7) Write your corporations by law
8) Create a shareholder agreement
9) File your corporation’s articles of incorporation
4) Advantages and disadvantages of each
Limited liability for the owners Ease on the sell and transfer
Continuity- being able to keep it going
Ease in rising prices
Complexity in organization and regulation
Limited liability may weaken credit capacity
5) Examples of a corporation
1) Krispy Kreme 6) Heinz
2) Exxon Mobile Corporation 7) Macy’s
3) Bank of America Corporation 8) Microsoft
4) Burger king 9) State Farm
5) FedEx 10) Staples
1) What is a sole priopertiership?
A sole proprietorship, also known as a sole trader or simply a proprietorship, is a
type of business entity that is owned and run by one individual and in which there
is no legal distinction between the owner and the business. The owner receives
all profits (subject to taxation specific to the business) and has unlimited
responsibility for all losses and debts. Every asset of the business is owned by
the proprietor and all debts of the business are the proprietor's. This means that
the owner has no less liability than if they were acting as an individual instead of
as a business. It is a "sole" proprietorship in contrast with partnership.
2) The Characteristics
The individual proprietorship or sore proprietorship is the oldest form of business organization. It
is as old as the civilization itself. Historically, it appears that business started first with this form of
organization. It is the simplest and natural type of organization.
Sole proprietorship is also called individual proprietorship, or one man business. Sole
proprietorship is a form of business organization in which an individual introduces his own capita),
uses his own skill and intelligence in the management of its affairs, assumes all the risks of
business and is solely responsible for the results of its operations. He, thus, owns all and risks all.
The business is exclusively in the hands of an individual. Most of the bakery, hardware stores,
service stations, barbers shop, doctor’s clinic, service stations, beauty parlors, etc. are examples
of sole proprietorship.
One man business is usually small but it can be a large as a steel mill or a departmental store
depending upon the resources available to the entrepreneur. Definitions of Sole Proprietorship.
3) The Form
1) Decide on a business name
2) Search availability of the name
3) Register your name
4) Obtain licenses and permits
The advantages and disadvantages
Ability to raise capital either publicly or privately
Limit the personal liability of the officers and managers, and to limit risk to investors
Raising capital for a proprietorship is more difficult because an unrelated investor has less peace
of mind concerning the use and security of his or her investment and the investment is more
difficult to formalize.
As a business becomes successful, the risks accompanying the business tend to grow.
5) Examples of sole priopertiership
Definition: A Franchise is a business licensed to sell a company’s products, to
operate a business that carries that company’s name or both.
Characteristics: A form of business organization in which a firm which already
has a successful product or service ( the franchisor) enters into a continuing
contractual relationship with other businesses (franchisees) operating under the
franchisor’s trade name and usually with the franchisor’s guidance, in exchange
for a fee.
Form: Legal fees for starting a franchise differ depending on what kind of
franchise you are trying to start but no matter what franchise you are starting a
large amount of paperwork must be filed and you must have an attorney. To
start a franchise you must have a Uniform Franchise Offering Circular, a
Franchise Agreement and of course there are initial costs.
• Expand much more quickly and less expensively
• More franchises that exist the greater your purchasing power
• Gain valuable ongoing, support, training and advice from franchiser
• Easier to start a franchise then your own business
• Lose a lot of control over your business
• Must follow the requirements est. by the franchise owner
• Must pay a certain percentage of your profits to the franchiser
4. Dunkin’ Donuts
5. H&R Block
6. Days Inn
7. Super 8
Definition: A relationship of two or more entities conducting business for mutual
Characteristics: There are multiple individuals, called general partners. The
general partners manage and shares equal responsibility for the company’s
profits and losses and its debts and liabilities. Partnership doesn’t pay taxes but
each partner reports its share of business profits or losses on their individual tax
Formation: To start a partnership you must follow some legal regulations so that
things go well for the partners, in situations that may occur. Partners must make
and agreement about financing, property, labor, customers and what each
person expects in terms of profits and ownership. For it to be an official
partnership it must be with more than one person and they must have the
intention of making a profit from the business.
• Easy and inexpensive
• NO formal or legal steps require in forming a partnership
• Income tax return is easy (partners taxed individually)
• Each partner is jointly and severally liable for the debts and obligations of
the business. (single partner can be sued)
• Personal assets at risk
• Profits that a business must be shared with other partner
• Any assets contributed are jointly owned- once partnership dissolved no
insurance will get your assets back
1. Chermak & Hanson
2. Ben and Jerry’s