Entrepreneurship - Ch 3 Types of Business & Business Ownership

wholesaling business (wholesaler)

buys goods in large quantities, typically from manufacturers, and resells them in smaller batches to retailers.

retailing business (retailer)

buys goods, often from wholesalers, and resells them directly to consumers, who are the end buyers.

dividend

a portion of the corporations profit.

manufacturing business (manufacturer)

converts materials into goods suitable for use and then sells those goods to others.

partnership agreement

legal document that clearly defines how the work, responsibilities, rewards and liabilities of a partnership will be shared by all partners.

liability

legal obligation of a business owner to use personal money and possessions to pay the debts of the business.

sole proprietorship

legally defined type if business ownership in which a single individual owns the business, collects all profit from it, and has unlimited liability for its debt.

partnership

legally defined type of business organization in which at least two individuals share the management, profit, and liability.

reseller's permit

Special permit, required by most states, that retailers must have to purchase goods tax-free from wholesalers and collect sales tax from end buyers.

unlimited liability

a business owner can be legally forced to use personal money and possessions to pay the debts of the business.

limited liability

a business owner cannot be legally forced to use personal money and possessions to pay business debt.

trade business

a business that is either a wholesale or retail business.

service business

a business that provides a service for a fee.

subchapter S corporation

a corporation not taxed as an entity, it's income or loss is applied to each shareholder and appears on their tax return.

North American Industry Classification System

a detailed numbering system developed by the United States, Canada, and Mexico to classify North American business establishments by their main production processes

general partnership

all partners have unlimited liability.

C corporation

corporation that is taxed as an entity by the federal government.

cooperative

is a business owned, controlled, and operated for the mutual benefit of its members.

nonprofit organization

is a legally defined type of business ownership in which a company operates not to provide profit for its shareholders but to serve the good of society.

corporation

is a legally defined type of business ownership in which the business itself is considered a type of "person"(often referred to as an "entity") under the law, and limited liability is granted to business owner(s).

share of stock

is a unit of ownership in a corporation.

franchise

is an arrangement in which an established company sells the right for others to use the company's name and operating plan to sell products or services.

limited partnership

is structured so at least one partner (the general partner) has limited liability for the debts of the business.

limited liability company

legally defined type of business ownership similar to corporation but with similar operating requirements and tax procedures, and greater liability protection for the business owners.

shareholders (stockholders)

owners of a corporation.

incorporate

to set up a corporation in accordance with the laws of the particular state where the business is located.