1. Identify and describe the various types of business ownership.

Provide
examples of each. Explain the advantages and disadvantages of each.

There are three types of business ownership: sole proprietorship, partnership, and
corporation. For sole proprietorship, it is the easiest type of business to establish.
As the proprietor, you’re the owner of the business so all the profits you make
depends on you. For example, you open a website to sell clothes online and if you
have profits then it all goes to you. But it would have its own disadvantages like if
the business doesn’t do well then you have to pay for all the loss or if the owner
dies or quits then the business would die too. For partnership, two or more
individuals combine to start the business. For instance, you and your friends
decided to sell cosmetics, then the profits have to be divided depending on the
agreement. The disadvantage could be the conflicts between them, also the death
or withdrawal of one partner dissolves the partnership. Corporations are
organizations sanctioned by state laws and considered legal entities. For example,
to start a corporation, you have to submit many legal documents and prove your
financial statement. The advantage is that it’s limited to the owners, can sell stocks
and bonds. The disadvantages are it’s not easy to start up, and it’s subjected to
extensive regulations.

2. What three institutions influence economics the most? Explain how

each influences economics and provide examples of each.
There are three types of institutions that influence economics: households,
business, government. For households, it provides land, labor, and
consuming products. For example, people buy lands, go to work, and mostly
buy products so that’s how households influenced the economy. For
business, they’re the ones who produced products and also the middlemen
who channel the profits to the owners. For example, car brands produce cars
and sell them to customers. For the government, it’s the one that regulates
the market, control tax as well as coin money.
3. If you were a sole proprietor and had annual profits of $100,000, how
would the profits be distributed?
If I were a sole proprietor and had annual profits of $100,000, the profits
would all go to me as an owner.

4. You are partners with Alice and Mark. You contributed 50% of the capital,
Alice contributed 30%, and Mark contributed 20%.

(a) How would the annual profits of $100,000 be distributed among all
three of you?
 The annual profits of $100,000 would be distributed depends on the capital
that you gave. I would have $50,000, Alice would have $30,000 and Mark
would have $20,000.

(b) Using these same numbers, how would an annual loss of $80,000 be
distributed between the three of you?

The annual loss would go the same as the profits; it depends on the capital
you gave. I would lose $40,000, Alice loses $24,000 and Mark’s loss would
be $16,000.

4. Conduct internet research to discover the three biggest threats to each

type of business institutions today. Report your findings in short essay
form.
Every business would have its own risk and threats. Especially nowadays we
have so many competitors, it would make it harder to be successful.
Recently, the threat that every business from the smallest to the biggest has
to face is the Covid 19. Many businesses have to close and if they could
survive then they are suffering a lot of loss too. Covid-19 made people
couldn’t go outside to buy products and so that the demands decrease and
the supply also decrease. Many people are unemployed and the government
has to support a lot.
For the sole proprietorship, they would have fewer customers than the
corporation or the partnership because you are new and you haven’t gained
their trust yet. Furthermore, because the sole proprietorship has one owner
so they have to pay for all the taxes due to the taxable is divided according
to the profit-sharing agreement. Also, it’s hard to raise capital. The investor
wants to ensure about the investment so as a sole proprietorship, they have
to prove the company worth it.
For the partnership, the threat could be the partner since you have to work
mostly with them to run the company. The business doesn’t have
independent legal status distinct from its partner. This can cause insecurity
and instability. Moreover, because of no independent legal status so it also
can cause debt for the company since the partner can personally liable and
the consequence is to harm the company.
For corporations, President Biden increased the tax for the corporation
which made it harder for them. Also the legal documents for the big
corporations also very complicated and it could make the company in
trouble too.
Iacurci, Greg. “How the Biden Capital Gains Tax Proposal Would Hit the Wealthy.” CNBC,
CNBC, 22 Apr. 2021, www.cnbc.com/2021/04/22/how-the-biden-capital-gains-tax-
proposal-would-hit-the-wealthy.html. 

Written by Johnathan KorchakPublished in Business management on August 27, et al.

“Advantages and Disadvantages of a Partnership Business.” Inform Direct, 29 Aug. 2017,
www.informdirect.co.uk/business-management/partnership-business-advantages-and-
disadvantages/. 

Pak, Anton, et al. “Economic Consequences of the COVID-19 Outbreak: the Need for Epidemic
Preparedness.” Frontiers, Frontiers, 18 May 2020,
www.frontiersin.org/articles/10.3389/fpubh.2020.00241/full. 

Bagla, Kelly. “5 Common Business Risks Sole Proprietors Face " Small Business
Bonfire.” Small Business Bonfire, 7 Jan. 2021, www.smallbusinessbonfire.com/sole-
proprietor-business-risks/.