Types of Business Ownership Flashcards
What is purchased from a parent organization, such as McDonalds, Holiday Inn, or Jiffy Lube. However, the ______ is responsible for setting up ________ ownership in accordance with the laws and ordinances of their locality.
Franchises
What are the 5 typs of business ownership?
Sole proprietorships: offer the heady atmosphere of independence. It’s great to be one’s own boss. It’s nice to be the sole beneficiary of your business’s profits. On the other hand, you can expect to work long, long hours. Also, your net profits will be taxed as personal income, and you’re subject to unlimited liability.If things go sour, you might lose your home, your car, and your sense of humor.
Partnerships: are legal forms of business that bind two or more people to a set of common business objectives. Partnerships come in several flavors.
Corporations: are legal entities that stand apart from the individuals involved in financing or managing an enterprise. There are three basic kinds of corporations.
S-corporations: are created by the government. They’re taxed in the same way as sole proprietorships or partnerships. Qualifying restrictions for S-corporations require the following.
Limited liability corporations (LLCs): are similar to S-type corporations, except that they aren’t encumbered by S-type restrictions. LLC charters provide managerial flexibility and choice as to the manner of taxation. They don’t have to hold annual meetings; managers can change direction as they see fit. However, LLCs can’t sell stock to raise capital. Thus, their revenues (as returns on assets and business operations) are usually contingent on access to lender credit
What are the advantages of buying an existing business?
There’s already a customer base.
The business will have a track record of such things as profit and loss statements, seasonal business fluctuations, taxes, utilities costs, and so on. Physical assets, such as the building, office equipment, desks, furnishings, and so on, will already be there, depending on the type of business.
The previous owner may agree to stay on for a while to help you get your feet on the ground
What is an autonomous association of persons who voluntarily cooperate for their mutual, social, economic, and cultural benefit?
What is an arrangement that permits people to pool their resources for different purposes. Independent grocers can join a wholesaling _______ to put them on a level playing field with large grocery chains. Not-for-profit hospitals can form a _______ to get a better deal on pharmaceuticals or other kinds of medical supplies.
Coopertive
What occurs when one company buys out another company?
Acquisition
What occurs when two companies join to form one company?
Merger
What occurs when two or more companies engaged in different operations within an industry merge into a single corporate entity. Imagine a petroleum production company, a refinery operation, and a chain of retail gasoline outlets all under one corporate roof. That would be the outcome of a vertical merger, also referred to as vertical integration within an industry
Vertical merger
What is the joining of two companies in the same industry to expand their market though shared expertise and the production of complementary goods and services? The _______ of two wireless companies is an example.
Horizontal merger
What joins firms in completely different industries? This sort of merger is generally aimed at diversifying investments and broadening sources of revenue.
Conglomerate merger
There are instances when a party attempts to buy out or gain control of another company through a __________?
In general, this means getting hold of more than 50% of the target company’s common stock.
Hostile takeover
What amounts to one or more parties bidding to take control of a business through borrowing sufficient funds—often against the collateral value of the company to be acquired?
Leveraged buyout
In effect, groups of employees or lower-level managers may join together to purchase a company is a form of?
Management buyout.
