Professional Documents
Culture Documents
How to Form a
Business
McGraw-Hill/Irwin Copyright © 2015 by the McGraw-Hill Companies, Inc. All rights reserved.
LEARNING OBJECTIVES
5-2
LEARNING OBJECTIVES
5-3
ANNE BEILER
Auntie Anne’s
5-5
MAJOR FORMS of OWNERSHIP
5-6
FORMS of
BUSINESS OWNERSHIP
5-7
ETHNIC BUSINESS CENTERS
Cities with the Most Minority-Run Firms
1. Atlanta, GA
2. Baltimore, MD
3. Nashville, TN
4. Houston, TX
5. Miami - Ft.
Lauderdale, FL Photo Credit: James Rintamaki
PROPRIETORSHIP
PROPRIETORSHIPS
Work over 80 hours per week Work over 40 hours per week
5-12
LO 4-2
MAJOR TYPES of PARTNERSHIPS
• Limited Partnership --
A partnership with one or
more general partners and
one or more limited
partners.
5-13
LO 4-2
TYPES OF PARTNERS
5-14
ADVANTAGES of LO 4-2
PARTNERSHIPS
• More financial
resources
• Shared
management and
pooled/complementa
ry skills and
knowledge
• Longer survival
• No special taxes
5-15
DISADVANTAGES of LO 4-2
PARTNERSHIPS
• Unlimited liability
• Division of profits
• Disagreements among
partners
• Difficult to terminate
5-16
LO 4-2
PICKING YOUR PARTNER
5-18
TEST PREP
5-19
CONVENTIONAL LO 4-3
CORPORATIONS
• Conventional (C)
Corporation -- A state-
chartered legal entity with
authority to act and have
liability separate from its
owners (its stockholders).
5-20
ADVANTAGES of LO 4-3
CORPORATIONS
• Limited liability
• Ability to raise more money for investment
• Size
• Perpetual life
• Ease of ownership change
• Ease of attracting talented employees
• Separation of ownership from management
5-21
HOW OWNERS AFFECT LO 4-3
MANAGEMENT
5-22
The BIG BOYS of BUSINESS LO 4-3
1. Walmart
2. Exxon Mobil
3. Chevron
4. Berkshire
Hathaway Photo Credit: Walmart Stores
5. Apple
CORPORATIONS
• Initial cost
• Extensive paperwork
• Double taxation
• Two tax returns
• Size
• Difficulty of termination
• Possible conflict with
stockholders and board of
directors 5-25
EVEN the BIG GUYS LO 4-3
MAKE MISTAKES
5-27
OLDIES BUT GOODIES LO 4-3
5-28
LO 4-4
MERGERS and ACQUISITIONS
• Acquisition --
One company’s
purchase of the
property and
obligations of
another company.
5-29
LO 4-5
FRANCHISING
5-30
MAKE WAY for the NEWBIES LO 4-5
1. Management and
marketing assistance
2. Personal ownership
3. Nationally recognized
name
4. Financial advice and
assistance
5. Lower failure rate
5-32
DISADVANTAGES of LO 4-5
FRANCHISING
5-33
THE BUILDING BLOCKS of
FRANCHISING
5-35