Types of Businesses and
Forms of Business Ownership
Corporation
A company that is entitled by law to carry out actions while being recognized as one person in law
Advantages
Limited Liability
Stocks
Long-term Value
Disadvantages
Taxation is Harder
Management is Harder
Separate Teams
Examples
Walmart
Amazon
Ikea
Cooperative
Business owned and controlled by the people that purchase the products the business produces
Advantages
Less Taxation
Long-term Existence
Easy Ownership
Profits are Shared Fairly
Each Member Gets 1 Vote
Disadvantages
Lack of Participation
Business will suffer
Owners Might Back Out
Corruption
Examples
Sunkist Growers
Amul
Farmers
Franchise
Advantages
Easier Financing
Company Support
Brand Recognition
High Success Rate (90%)
Independence
Disadvantages
Company Restrictions
No Room for Creativity
Standard Checks
Examples
Popeyes
KFC
Subway
A large company allows individuals to open up businesses in the name of the franchise. The franchisee operates the business, while they pay the franchisor for the right to use the name The franchisee can use the franchisor's business models and ideas contractually.
Sole
Proprietorship
Advantages
Less Formalities
Full Control
Mixing of Assets
Simplified Tax Reporting
Disadvantages
Personal Debts
No long-term value
Stress
Examples
Nail Salons
Hairdressers
Independent Contractors
Freelance Artists
One person is single-handedly responsible for the business and is legally tied to it
Partnership
Two or more people agree to form a legal relationship to run a business. Each of the partners has to invest in the business and each profits from it or they share the debt equally
Advantages
Flexibility
Limited Partnerships
Shared Responsibility
Easy Taxation
Disadvantages
Personal Relationship
Unfair Delegation of Work
Affordability
Examples
Microsoft (Bill Gates and Paul Allens)
Apple ( Steve Jobs, Steve Wozniak)
Google (Larry Page, Sergey Brin)
Service
Service businesses are businesses that provide an activity or preform a certain task for commercial purposes
Advantage
Subtopic
Disadvantage
Examples
Non-Profit
A tax-exempt organization formed for religious, charitable, literary, artistic, scientific, or educational purposes
Advantages
More Credibility
Personal Liability Protection
Tax-Exempt Status on Net Income
Disadvantages
Volunteers
Hard to get funded
Examples
Salvation Army
The Nature Conservancy
World Wildlife Fund (WWF)
Merchandising
Businesses that buy certain products
and resell those goods for a profit
Advantages
Brand Recognition
Increased Sales
Attractive Space
Disadvantages
Higher Demands on Staff
Reputation
Expenses
Examples
Walmart
Micheals
Home Depot
Lowe's
Toys-R-Us
Manufacturing
A business that uses any raw materials, components or parts to assemble finished goods
Adavantages
More ways to earn a profit
More awareness of your brand/product
Tax Advantages
Disadvantages
Costly to Start business
Location
A lot of competition
Examples
Adidas
Nike
Lush
E-commerce
E-commerce is the transfer or transaction of products through an electronic store
Advantages
Always available 24/7
More convenient for customers
Anyone can reach the store
Easy to start and manage business
Disadvantages
Product quality
Hackers
Customer Loyalty is not always guaranteed
Examples
Amazon
Ebay
Netflix
Any online store