Five types of business organizations
- Sole Proprietorship
- General or limited Partnership
- Corporation
- Limited liability company or limited liability partnership
- Joint venture
Sole Proprietorship
Is owned by who?
Pros and cons? (3 for each)
- Owned by an individual
- Pros: easy set-up, total control, tax advantages
- Cons: raising capital and establishing credit depends on owner, can be difficult to sell to others, once the owner is gone the firm is closed
Partnership- General Partnership
Owned by?
Structure- what is shared? What are they responsible for?
- Owned by two or more people
- Management, profits are shared
- Each general partner is responsible for business debts and liabilities
Partnership- Limited partnership
Structure? Who is involved and what are their roles?
General partners and limited partners-
General partners are responsible for business management and finances. The limited partner is an investor who receives a portion of the profit but has no say in management. They are liable only to the extent of their investment
Partnership
Pros (1) and cons (4)
- Pros: partners bring additional talent and insight
- Cons: liable for the actions of other, personal assets of any of the partners are vulnerable to lawsuits, income is taxed at individual rates, disagreements
Corporations
Structure? (3) what are their roles?
Made up of: 1. Stockholders 2. Directors (elected by stockholders) 3. Officers (elected by directors)
- Owners in proportion to the number of shares they own
- Responsible for broad policy decisions
- Day to day management
Corporation pros and cons
- Shareholders are financially liable for only what they put in it. 2 if the corporation is sued the personal assets of the shareholders are not at risk 3. Easy to raise capital by selling stock 3. Taxed at lower rates
Cons: 1. Initial cost 2 paperwork to maintain it
Corporation- S Corporation
Who is it for?
Pros
For small businesses- no more than 100 shareholders
Allocated its income and losses directly to shareholders, to avoid tax on the corporate income
Corporation- professional corporation
For who? Pros?
For certain professions: architects, lawyers, doctors, accountants, interior designers.
Pros: liability of malpractice is limited to the person responsible for the act
Limited Liability Company and Limited Liability Partnership-
Made up of?
Pros are similar to that of a ?
Is the business taxed?
Are members of LLC are considered to be self-employed? If so what does that imply?
If members of an LLC wanted to be taxed as a whole can they? And if so what would they be classified as
- Similar to that of a sole proprietorship, with the limited liability of a corporation. Also easier to set up
- Members and managers
- Business itself is not taxed, some states may tax the LLC
- Yes, this means they need to report and pay self-employment tax for Social Security and Medicare
- Yes, they ca elect to be classified as an S corporation, it will be taxed as an S Corp.
Joint Venture Structure? Purpose? Can it be sued like a corporation? Similar structure to that of a ? Are projects taxed as a partnership or individual members get taxed separately?
- Made up of two or more firms working on a temporary project
- If a specific project is too complex for one firm alone a formal written agreement is developed outlining what will happen with gains and losses= teaming agreement.
- No
- Partnership
- Depends on the state
What does the terms: “in the same time frame” mean?
What does the term: “ the same or similar facts and circumstances” mean?
- At the time the project is designed or built, not at the time of the dispute.
- Includes budget, scheduling and the complexity of the project
Two types of work organizations?
What is it
Pros and cons
- Horizontal Organization/ Flat Organization -
Organized into different departments and functions similarly to an assembly line
Pros-efficient, takes advantages of people’s specialties
Cons- no room to really learn and branch into other specialties, inflexible and resistant to innovation and change - Vertical Organization/ Studio organization
Each studio is responsible to bring a project from start to finish
Pros-close and immediate communication, sharing ideas, problem solving,works well with a project manager
Supporting staff examples
Employees other than professional staff and senior management:
Administrative assistants, receptionists, bookkeepers, marketing people, model builders, and tech. Assistants
With is a Certificate if Authorization (COA)? Who is it for and what is the alternative for a Limited Liability Corporation or a professional limited corporation?
A certificate that allows a firm to offer services to the public. This is corporations.
An LLC certificate can be given to LLC
Does every business have to have a license to offer their services regardless of size?
Yes. The license allows the business to practice and serves as the basis for taxation
Do architects typically need to renew their license? Req?
Yes. Payment and a completion of a min number of continuing education credits
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What are the 3 Canons (broad principles) of conduct? And give an examples
Canon 1- General Obligations: maintain and improve knowledge and skill- seek to improve society and the environment
Canon 2- Obligations to the Public- uphold the law- render pro bono services- serve the public interest- never try to influence a public official with payment
Canon 3- Obligations to the Client- exercise unbiased judgement - avoid conflicts of interest- don’t accept jobs beyond your professional capacity
What are the two types of contracts an employ might be under and explain
- Noncompete Clause or Restrictive Covenant- limits who the employee may work for during a specific amount of time after leaving the firm to make sure confidential info isn’t being passed on or competing business
- Employment at will- no written contract and an employee can leave or be fired any time
Generally what are the factors that would render a person a freelancer? (5)
- Hired for a specific project
- They control where and how they perform their work
- They provide their own supplies
- Receive no benefits from the firm
- Free to work for other firms at the same time
Standard versus Fringe Benefits
Standard= paid vacation, sick leaves, health insurance, educational benefits, retirement plans, dental, vision insurance, travel expenses, life insurance
Fringe Benefits= vary from firm to firm but can include: car, gym membership, company vacation home, flextime etc.
Fringe Benefit- being able to set your own hours ex. Working in office 9-3 then work at home or working extra hours to work only 4 days a week etc.
Flextime
Fringe Benefit- employers can choose additional benefits from a menu of options based on a lump-sun allowance
Flexible Benefit Packages
Fringe Benefit: Parties, sightseeing field trips, pizza lunches, wine tasting,
Office-sponsored events
