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Chapter Four

Chapter Four. Choosing a Form of Business Ownership. 4 | 1. Learning Objectives. Describe the advantages and disadvantages of sole proprietorships Explain the different types of partners and the importance of partnership agreements Describe the advantages and disadvantages of partnerships

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Chapter Four

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  1. Chapter Four Choosing a Form of Business Ownership 4 | 1

  2. Learning Objectives • Describe the advantages and disadvantages of sole proprietorships • Explain the different types of partners and the importance of partnership agreements • Describe the advantages and disadvantages of partnerships • Summarize how a corporation is formed • Describe the advantages and disadvantages of a corporation 4 | 2

  3. Learning Objectives (cont’d) • Examine special types of corporations, including S-corporations, limited-liability companies, and not-for-profit corporations • Discuss the purpose of a cooperative, joint venture, and syndicate • Explain how growth from within and growth through mergers can enable a business to expand 4 | 3

  4. Sole Proprietorships, Partnerships, and Corporations in the U.S. • Define • Sole Proprietorship • Partnership • Corporation • Which is the most common form of business organization? • Which form of business organization accounts for the largest percentage of sales? 4 | 4

  5. Advantages and Disadvantages of Types of Business Ownership • What are the defining characteristics of • Sole Proprietorships • Partnerships • Corporations • What are the advantages and disadvantages of each organizational form? 4 | 5

  6. Sole Proprietorships • Know why sole proprietorships are popular • Who owns sole proprietorships? • Do these businesses tend to be large or small? • Where do sole proprietorships obtain financing? 4 | 6

  7. Partnerships • What is the difference between a • General Partner • Limited Partner • What is an Articles of Partnership? • What information should this document include? • Why is it a good idea to create an articles of partnership? 4 | 7

  8. Corporations • How is a corporation different from a sole proprietorship or a partnership? • What are the forms of Corporate Ownership? Be able to define them • Stock • Stockholder • Closed Corporation • Open Corporation • Why do corporations issue stock? 4 | 8

  9. Forming a Corporation • How does one form a corporation? • Define Incorporation • Why is it a good idea to consult a lawyer when forming a corporation? • What are some of the aspects of business that may require legal expertise? 4 | 9

  10. Forming a Corporation (cont’d) • Where can a business incorporate? • Define • Domestic Corporation • Foreign Corporation • Alien Corporation • What is the Corporate Charter? • What information does it include? 4 | 10

  11. Stockholders’ Rights • Be able to define and discuss the following • Common Stock • Preferred Stock • Dividend • Proxy • What is an Organizational Meeting? • When does it occur in the process of forming a corporation? 4 | 11

  12. Hierarchy of Corporate Structure • What is a Board of Directors? What role does it play in a corporation? • What is the difference between Outside andInside Directors? • Who are Corporate Officers? • What do they do? • Who are Stockholders? • How do they influence a corporation’s board of directors? 4 | 12

  13. Special Types of Business Ownership • Know and be able to discuss special types of business ownership • S-Corporations • What are the required criteria to adhere to this type of ownership? • What are the advantages and disadvantages? • Limited-Liability Company (LLC) • What are the required criteria to adhere to this type of ownership? • What are the advantages and disadvantages? • What are the differences between s-corporations and LLCs? • How are s-corporations and LLCs different from regular corporations? 4 | 13

  14. Special Types of Business Ownership (cont’d) • Be able to define Not-For-Profit Corporations • How does the goal of a not-for-profit differ from other businesses? • Do not-for-profits pay taxes? 4 | 14

  15. Cooperatives, Joint Ventures, and Syndicates (cont’d) • Define • Cooperatives • What is unique about how cooperatives organize? • What kinds of groups tend to form cooperatives? • Joint Ventures • When are joint ventures advantageous for businesses? • Syndicates • When are syndicates used? • How long do these organizations last? 4 | 15

  16. Corporate Growth • How do corporations grow? • Growth from within • Growth through mergers and acquisitions • Define • Merger • Hostile Takeover • Tender Offer • Proxy Fight 4 | 16

  17. Corporate Growth(cont’d) • Be able to define and distinguish between different types of mergers • Horizontal Mergers • Vertical Mergers • Conglomerate Mergers 4 | 17

  18. The Future of Mergers and Acquisitions • What have been the Merger and Acquisition Trends during the 21st century, especially during the most recent economic crisis? • What do recent corporate takeover trends indicate about the future business environment? • What are the arguments for and against corporate takeovers? 4 | 18

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