chapter 2 Flashcards
what is a sole proprietorship?
a business owned by one person, normally known as the proprietor. as a sole proprietor you declare your business income on your personal income tax
Advantages and disadvantages of sole proprietorship?
A: starting the business is easier and less expensive
D: Unlimited liability makes organizing difficult, if the owner dies, the business ends
what does the sole proprietor do?
have many responsibilities- buy merchandise, sell, accounting, arrange displays & cleans the store
What is a partnership
a business that is usually operated by two or more individuals who want to share the costs and responsibilities of running a business. They record the terms of their partnership in a partnership agreement.
Advantages and disadvantages of a partnership
A: Easy to set up, able to borrow money from the bank
D: Unlimited liability, when one person dies the business ends
Example of sole prorietorship
Longo’s plumbing
example of partnerships
A&W, Baskin Robins
What is a corporation
A seperate legal entity owned by shareholds through share and is led by a board of directors
Ads and Disads of Corporations
A: Easier to raise financing, can have lower tax rate
D: more expensive to set up
more complex government and reporting and regulation
example of corporation
apple, coca cola
what is a co-operative
Owned through shares but each person can only own one share
Ads and disads of co-operative
A: organized on a democratic principle of one member, one vote, limited liability
D: no incentive to invest more as you only own one share
example of co-operative
insurance company
what is a franchise?
one business, the franchiser, licences the rights to its name, operating procedure, designs, and business expertise to another business, the franchise. the franchiser and the franchisee are independent businesses affiliated for this agreement only
A and D of a franchise
A: can make a large profit over time
D: chance you can go bankrupt
what are the 4 types of businesses
service, retail, not for profit, manufacturing
Start up money is available through what kinds of sources?
debt financing and equity financing
what is debt financing?
borrowing money to start up a business
what is equity financing?
using your own savings to start up the business
advantage and disadvantage of equity financing
A: you don’t have interest expense and no set payments to make
D: you are risking all of your savings
where can you find financing
banks, trust companies,credit unions, family,rich uncle bob
what is a joint venture
an alliance where 2 or more people or companies agree to contribute goods, services, and/or capital to a common commercial enterprise
Joint Venture vs Partnership
where members have teamed together for a particular purpose, whereas a partnership the members have joined to run the business in general
top 10 global franchise business
- mcdicks
- subway
- 711
- international hotel group hotels
- pizza hut
- kfc
- burger king
- a&w
- ace hardware
- naturhouse
what is a strategic alliance?
agreements between businesses in which each business commits resources to achieve a common set of objectives.
what is a merger
when two or more companies join together, either because one has purchased a controlling interest in the other or because the two companies have combined interests
what is offshoring
relocation of a part of a company’s operation to another country
what is outsourcing
relocation of part of a company’s operation to another company, often done with payroll service
what is multinational corps
a business that conducts business in several different countries
What is gdp
The amount of products and services a company make
