Chapter 8 Eco.

What are the disadvantages of incorporation?

-difficult and costly to start -more regulated -owners have less control -double taxation

What are the advantages of incorporation?

-easier to raise financial capital -limited liability -unlimited life -specialized management

What are the advantages of sole proprietorships?

-easy to start -few government regulations -complete control -owner keeps all profit -lower taxes -pride of ownerships

What are the advantages of partnerships?

-easy to start -few government regulations -shared decisions making and increased specialization -greater ability to raise financial capital -more able to attract and retain workers -lower taxes

What is an entrepreneur and what is the role of an entrepreneur in a market economy?

-the prime mover in the market economy, someone who can see what others can not see -the role is to discover and introduce new and better products and more efficient ways of doing things

What are the disadvantages of sole proprietorships?

-unlimited personal liability -difficult raising financial capital -limited life -difficult finding and keeping good workers -broad responsibility

What are the disadvantages of partnerships?

-unlimited personal liability -limited life of the business -partners may disagree -profits must be shared

Why wasn't the Bell Labs employee who invented the first transistor an entrepreneur?

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limited liability company (LLC)

A business organization in which the business (not the owner) is liable for the company's debts.

S corporation

A closely-held corporation that is taxed like a partnership, while affording its owners the limited liability of a corporation. In order to qualify as an S Corporation, the corporation:

How is a corporation established?

A corporation is formed when Articles of Incorporation are accepted by the state.

cooperative

A nonprofit organization owned and operated by its members for the purpose of saving money on the purchase of certain goods and services.

limited liability partnership (LLP)

All partners are limited partners and not responsible for the debts and other liabilities of other partners

not-for-profit organizations

An organization that operates for purposes other than making a profit.

Do you think the advantages of organizing a business as a sole proprietorship outweigh the disadvantages? Why or why not?

No I do not because if you are a smart businessman you will be aware of these disadvantages and learn how to deal with them because you should know what you are getting yourself into.

private corporation

One in which all the shares are held by a few shareholders, such as management or family members, and are not publicly traded.

corporation

a legal entity with an existence distinct from the people who organize it, own it, and run it.

articles of incorporation

a written legal document that defines ownership and operating procedures and conditions for the business

limited partnership

at least one partner must be a general partner

If you were to start a business would you rather be a partner or a sole proprietor? Give reasons for your answer....

i would much rather be a partner because they do not have as hard of time making money as sole proprietors do and they also last longer than a sole proprietorship.

Name and describe other types of organizations businesspeople may choose.

limited liability company (LLC)-A business organization in which the business (not the owner) is liable for the company's debts. limited liability partnership (LLP)-All partners are limited partners and not responsible for the debts and other liabilities of other partners cooperative-A nonprofit organization owned and operated by its members for the purpose of saving money on the purchase of certain goods and services.

What groups perform part of the entrepreneur's role but are not considered entrepreneurs?

managers

publicly traded corporation

owned by many shareholders; shares can be bought or sold on stock exchanges

liability

the legal obligation to pay any debts of the business

Financial Capital

the money needed to start or expand the business

innovation

the process of turning an invention into a marketable product

sole proprietorship

the simplest form of business organization; a firm that is owned and run by one person who sometimes hires other workers

Why is the corporation the preferred business form for large businesses?

they raise much more money which means more profit for the business

partnership

two or more individuals who agree to contribute resources to the business in return for a share of any profit or loss

general partnership

where partners share both in the responsibility for running the business and in any liability arising from its operation