Business Chapter 5. Understanding Business

The advantage of starting and ending the business?

All you have to do is buy or lease the needed equipment.

What are some advantages of sole proprietorship?

Ease of starting and ending the business, being your own boss, pride of ownership, leaving a legacy, retention of company profits, no special taxes.

What are advantages of 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.

What is the advantage of leaving a legacy?

Owners can leave an ongoing business for future generations.

What is the advantage of retention of company profits?

Owners keep the profits earned.

What is the pride of ownership?

When you own your own business, your proud of their work.

What is a corporation?

a chartered legal entity with authority to act apart from its owners

What is a general partnership?

all owners share in operating the business and in assuming liability fro the businesses debts.

What is a leveraged buyout?

an attempt by employees, management, or a group of private investors to bu out the stockholders in a company, primarily by borrowing the necessary funds.

In a leveraged buyout, employees, managers, or investors finance the purchase of the company by?

borrowing against its assets

What an acquisition?

company's purchase of the property and obligations of another company.

What is a legal entity with authority to act and have liability apart from its owners?

corporation

What are three reasons a business might change ownership form?

dropping a partner, adding a partner, seeking limited liability

What are the types of partnerships?

general partnerships, limited partnerships, master limited partnerships.

What are disadvantages of corporations?

initial cost, extensive paperwork, double taxation, two tax returns, size, difficulty of termination, possible conflict with stockholders and board of directors.

What is a vertical merger?

joins two firms operating in different stages of related businesses.

What are disadvantages of franchises?

large start-up costs, shared profit, management regulation, coattail effects, restrictions on selling, fraudulent franchisers.

Advantages of LLC's?

limited liability, choice of taxation, flexible ownership rules, flexible distribution of profits and losses, operating flexibility.

What does limited liability mean?

limited partners liability for the debts of the business is limited to the amount they put into the company, their personal assets are not at risk.

What is a limited liability partnership?

limits partners risk of losing their personal assets to the outcomes of only their own acts and omissions and those of people under their supervision.

What are advantages of franchises?

management and marketing assistance, personal ownership, nationally recognized name, financial advice and assistance, lower failure rate.

What businesses are growing at more than six times the national rate.

minority owned

What are advantages of partnerships?

more financial resources, shared management, longer survival, no special taxes.

Whats a limited partnership?

one or more general partners and one or more limited partners.

What is a cooperative or a co-op?

owned and controlled by the people who use it, producers, consumers or workers and similar needs who pool their resources for mutual gain

What may you have to do when starting a sole proprietorship?

permit or license.

Partnerships are 4 times more likely to succeed than?

proprietorships

What do home based businesses offer as advantages?

relief from the stress of commuting, extra time for family, low overhead expenses.

What is a merger?

result of two firms joining to form one company.

What are the three major forms of business ownership.

sole proprietorship, partnerships, corporations.

What is a business owned and managed by one person?

sole proprietorships

What is a conventional corporation?

state chartered legal entity with authority to act and have liability separate from its owners, its stockholders.

What are attributes of a master limited partnership?

taxed like a partnership. acts like a corporation, traded on the stock exchange

What do franchisors use to extend their brands, to meet needs of both their customers and their franchisees.

technology, social media.

What is a horizontal merger?

two firms in the same industry and allows them to diversify or expand their products.

What is an S corporation?

unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships.

What is a conglomerate merger?

unites firms in completely unrelated industries in order to diversify business operations and investments.

When each general partner is liable fro the debts of the firm, no matter who was responsible for causing the debt, this is am?

unlimited liability

What are disadvantages?

unlimited liability, division of profits, disagreements among partners, difficulty of termination.

What are disadvantages of Sole proprietorships?

unlimited liability, limited financial resources, management difficulties, overwhelming time commitment, few fringe benefits, limited growth, limited life span.

Whats the advantage of being your own boss?

working for others simply does not have the same excitement as working for yourself.