Business Essentials | Topic 3, Lesson 1 Review

Organize the characteristics, advantages, and disadvantages of the Business Ownership types:

Groups:

(a) Sole Proprietorship

,

(b) Partnership

,

(c) Corporation

,

(d) Franchise

• Owner is responsible for all debts

• Strongest protection from personal liability

• A written contract granting permission to operate a business to sell products and services

• Shared responsibilties, money, and expertise

• Separate legal entity

• It is easy to form due to lower cost and few regulations

• Divided authority among partners

• Owned by TWO or MORE people who have entered into an agreement

• Owned by ONE person

• MULTIPLE OWNERS who own stock

• Most expensive form to organize

• Owner is in charge of all day to day aspects of the business

Organize the types of business ownership based on their liability:

Groups:

(a) UNLIMITED LIABILITY

,

(b) LIMITED LIABILITY

,

(c) Depends

• Franchise

• Sole Proprietorship

• Partnership

• Limited Liability Company (LLC)

• Cooperative

• Corporation

Sophia is passionate about photography and wants to start a business taking portraits for families, weddings, and senior photos. She enjoys being her own boss and setting her own schedule. She knows she will be personally responsible for any financial losses or lawsuits if a client is unhappy.

What form of business ownership best fits this scenario?

• Sole Proprietorship

• Parternship

• Corporation

• Franchise

• Cooperative

14. Marcus and David, both experienced mechanics, decide to open an auto repair shop together. Marcus specializes in engines, while David focuses on electrical systems. They agree to split profits equally and share responsibility for any debts or legal issues the business may face.

What form of business ownership best fits this scenario?

• Sole Proprietorship

• Parternship

• Corporation

• Franchise

• Cooperative

14. A team of engineers and investors form a corporation to develop and sell solar panels for homes and businesses. To raise millions in funding, they sell shares of the company to outside investors, allowing them to expand rapidly while limiting personal financial risk.

What form of business ownership best fits this scenario?

• Sole Proprietorship

• Parternship

• Corporation

• Franchise

• Cooperative

14. Jordan loves the idea of owning a business but doesn’t want to take the risk of starting from scratch. He purchases a franchise for a popular smoothie chain, giving him instant brand recognition and a built-in customer base. However, he must follow the corporate guidelines and pay royalties.

What form of business ownership best fits this scenario?

• Sole Proprietorship

• Parternship

• Corporation

• Franchise

• Cooperative

14. A group of local artists decides to open an art gallery where they can sell their work. Instead of one person owning the business, each artist contributes a share of the costs and helps run the gallery. Profits are split among all members, and decisions are made collectively.

What form of business ownership best fits this scenario?

• Sole Proprietorship

• Parternship

• Corporation

• Franchise

• Cooperative

Which form of business ownership is an add-on that protects you from personal liability, in most instances, your personal assets?

• Franchise

• LLC

• Insurance

• Cooperative