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Forms of Business
Organizations
grade 10
acknowledgements
This presentation has been designed by N L
Kekana with the use of some sources found
in the last slide of this presentation.
My business or our
business.????
Different
SoleTraders
• The most common form
of business
organisation.
• Owned and operated by
one person
• Very few legal
requirements for setting
it up.
Advantages
• Easiest and least expensive
form of ownership to organize.
• Sole proprietors are in
complete control, and within
the parameters of the law, may
make decisions as they see fit
• Sole proprietors receive all income
generated by the business to keep
or reinvest.
• Profits from the business flow
directly to the owner's personal
tax return.
• The business is easy to dissolve, if
desired.
disadvantages
• Sole proprietors have unlimited
liability and are legally responsible
for all debts against the business.
Their business and personal assets
are at risk.
• May be at a disadvantage in
raising funds and are often limited
to using funds from personal
savings or consumer loans.
• May have a hard time attracting
high-caliber employees or those
that are motivated by the
opportunity to own a part of the
business.
• Some employee benefits such as
owner's medical insurance
premiums are not directly
deductible from business income
(only partially deductible as an
adjustment to income).
Partnership
What is partnership?
Partnership is a type of business where 2 or more
people agree to own, run and trade. Partnerships
require a high degree of trust and are very
common in fields such as medicine.
Partnership
When setting up a business a person has to decide
whether to set up a business on their own or with
others.
This will depend on:
• how much control they want over the business
• are they prepared to share the profit
• can they raise necessary capital to start up the
business by themselves
Partnership
• There is also a risk factor. Is this person prepared
to accept the risk of unlimited ability?
Partnership
The advantages of partnership are:
• easy to set up
• solicitors and accountants are not required to run the
business
• profits belong to the partners
• privacy. Only tax authorities need to be told how
much partners are earning and profit of the business
Partnership
• often good relations between partners
• raising capital for the business is easier than that of sole
proprietor
• different expertise for partners e.g. 1 specialises in
accountancy whilst the other in marketing
Some businesses have sleeping/silent partners. They play
a little role in running day to day basis of a business but
they provide the capital for the business.
Partnership
The disadvantages of partnership:
• Disagreements between partners, which can be
bad for business
• some partnerships don’t have a deed of
partnership, which can be bad for business
• most partnerships are relatively small businesses
e.g. Shops, farms
Partnership
Definitions:
• Ordinary Partnerships - there can be between 2 and
20 partners
• Deed of Partnership - is the legal contract, which sets
out following:
• who the partners are
• capital brought into business by each partner
• how profits should be shared
Partnership
• how many votes each partner has in any partnership
meeting
• what happens if there is a withdrawal of a partner
from the business
What Is a Corporation?
There are three types of
corporations:
•C-corporation
•Subchapter S corporation
•nonprofit corporation
corporation
a business that is registered by a
state and operates apart from its
owners; it issues shares of stock and
lives on after the owners have sold
their interest or passed away
In a corporation, the owners of the business are
protected from liability for the actions of the
company.
The Main Idea
C-Corporation
In smaller corporations,
the founders generally
are the major
shareholders.
shareholders
the owners of a corporation
TWOTYPES OF CORPORATIONS
1. PRIVATE COMPANY
• Closely held by a few people
• Minimum 2 and maximum 50
shareholders
partnership
• Stocks cannot be traded on exchanges and private
equity cannot be raised
• Less regulations as compared to Public Companies
2. PUBLIC COMPANY
•Stocks are held by a
large number of people
•Minimum 7
shareholders and no
limit for maximum
Public company
• Can be listed on stock exchange and can go public
• Have to follow many laws with regards to the board
composition and AGM.
List of references
• JohnV.
Padua,http://www.slideshare.net/johnpadua/forms-of-
small-business-ownership
• legal6 , http://www.slideshare.net/legal6/the-legal-
forms-of-business-presentation-872138
• aureen-masuku , http://www.slideshare.net/aureen-
masuku/business-forms-15102218

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legal forms of ownership

  • 2. acknowledgements This presentation has been designed by N L Kekana with the use of some sources found in the last slide of this presentation.
  • 3. My business or our business.????
  • 5. SoleTraders • The most common form of business organisation. • Owned and operated by one person • Very few legal requirements for setting it up.
  • 6. Advantages • Easiest and least expensive form of ownership to organize. • Sole proprietors are in complete control, and within the parameters of the law, may make decisions as they see fit • Sole proprietors receive all income generated by the business to keep or reinvest. • Profits from the business flow directly to the owner's personal tax return. • The business is easy to dissolve, if desired.
  • 7. disadvantages • Sole proprietors have unlimited liability and are legally responsible for all debts against the business. Their business and personal assets are at risk. • May be at a disadvantage in raising funds and are often limited to using funds from personal savings or consumer loans. • May have a hard time attracting high-caliber employees or those that are motivated by the opportunity to own a part of the business. • Some employee benefits such as owner's medical insurance premiums are not directly deductible from business income (only partially deductible as an adjustment to income).
  • 8. Partnership What is partnership? Partnership is a type of business where 2 or more people agree to own, run and trade. Partnerships require a high degree of trust and are very common in fields such as medicine.
  • 9. Partnership When setting up a business a person has to decide whether to set up a business on their own or with others. This will depend on: • how much control they want over the business • are they prepared to share the profit • can they raise necessary capital to start up the business by themselves
  • 10. Partnership • There is also a risk factor. Is this person prepared to accept the risk of unlimited ability?
  • 11. Partnership The advantages of partnership are: • easy to set up • solicitors and accountants are not required to run the business • profits belong to the partners • privacy. Only tax authorities need to be told how much partners are earning and profit of the business
  • 12. Partnership • often good relations between partners • raising capital for the business is easier than that of sole proprietor • different expertise for partners e.g. 1 specialises in accountancy whilst the other in marketing Some businesses have sleeping/silent partners. They play a little role in running day to day basis of a business but they provide the capital for the business.
  • 13. Partnership The disadvantages of partnership: • Disagreements between partners, which can be bad for business • some partnerships don’t have a deed of partnership, which can be bad for business • most partnerships are relatively small businesses e.g. Shops, farms
  • 14. Partnership Definitions: • Ordinary Partnerships - there can be between 2 and 20 partners • Deed of Partnership - is the legal contract, which sets out following: • who the partners are • capital brought into business by each partner • how profits should be shared
  • 15. Partnership • how many votes each partner has in any partnership meeting • what happens if there is a withdrawal of a partner from the business
  • 16. What Is a Corporation? There are three types of corporations: •C-corporation •Subchapter S corporation •nonprofit corporation corporation a business that is registered by a state and operates apart from its owners; it issues shares of stock and lives on after the owners have sold their interest or passed away
  • 17. In a corporation, the owners of the business are protected from liability for the actions of the company. The Main Idea
  • 18. C-Corporation In smaller corporations, the founders generally are the major shareholders. shareholders the owners of a corporation
  • 19. TWOTYPES OF CORPORATIONS 1. PRIVATE COMPANY • Closely held by a few people • Minimum 2 and maximum 50 shareholders
  • 20. partnership • Stocks cannot be traded on exchanges and private equity cannot be raised • Less regulations as compared to Public Companies
  • 21. 2. PUBLIC COMPANY •Stocks are held by a large number of people •Minimum 7 shareholders and no limit for maximum
  • 22. Public company • Can be listed on stock exchange and can go public • Have to follow many laws with regards to the board composition and AGM.
  • 23. List of references • JohnV. Padua,http://www.slideshare.net/johnpadua/forms-of- small-business-ownership • legal6 , http://www.slideshare.net/legal6/the-legal- forms-of-business-presentation-872138 • aureen-masuku , http://www.slideshare.net/aureen- masuku/business-forms-15102218