MOE - Becoming an Owner Part 1/3

Summary

The video script discusses the three main forms of business ownership: sole proprietorship, partnership, and corporations. It outlines the characteristics, advantages, and disadvantages of each. Sole proprietorships are simple to create but have unlimited personal liability. Partnerships offer shared liability and management but can suffer from disagreements and lack continuity. Corporations provide limited liability, easy access to capital, and perpetual succession but are more complex and costly to form, and are subject to double taxation.

Takeaways

• 😀 The discussion focuses on the forms of business ownership, including sole proprietorship, partnerships, and corporations.
• 📚 Learning objectives include understanding the characteristics of each form, comparing them, and explaining their advantages and disadvantages.
• 👤 Sole proprietorship is a business owned by an individual, with advantages like simplicity, low startup costs, and total decision-making power.
• 🚫 Disadvantages of sole proprietorship include unlimited personal liability, limited skills and capabilities, limited access to capital, lack of continuity, and difficulty in hiring employees.
• 🤝 Partnerships involve two or more persons sharing ownership, with general partnerships having equal participation in profits and losses.
• 💼 The limited partnership offers limited liability to its partners, which can attract investment and provide flexibility.
• 💵 Partnerships have the advantage of easy formation, access to more capital, less government regulation, and pass-through taxation.
• 🚨 Partnerships also carry risks such as unlimited liability in general partnerships, potential management disagreements, and lack of continuity.
• 🏢 Corporations are legal entities separate from their owners, offering limited liability, access to substantial capital, perpetual life, and the ability to attract skilled workers.
• 📈 Corporations provide significant advantages like limited liability, the ability to raise funds publicly, and continuity of operations beyond the lifespan of the owners.
• 💸 The main disadvantages of corporations include the complexity and cost of formation, government regulations, and double taxation on profits and dividends.

Q & A

What are the three main forms of business ownership discussed in the script?

The three main forms of business ownership discussed are sole proprietorship, partnership, and corporations.

What is the definition of sole proprietorship as mentioned in the script?

Sole proprietorship is a kind of business that is owned by an individual.

What are the advantages of sole proprietorship according to the script?

The advantages of sole proprietorship include simplicity to create, low startup fees, total decision-making power, no need to share profits, and ease of termination.

What are the disadvantages of sole proprietorship highlighted in the script?

The disadvantages of sole proprietorship include unlimited personal liability, limited skills and capabilities of the owner, limited access to capital, lack of business continuity, and difficulty in hiring employees.

What is the difference between a general partnership and a limited partnership?

In a general partnership, all partners participate in and are liable for the business's profits and losses equally or to some degree ratio. In a limited partnership, the liability of the limited partners is limited to the amount of their investment, while at least one general partner is liable for all the business's liabilities.

What are the advantages of a partnership as discussed in the script?

The advantages of a partnership include ease and low cost to form, broadening the pool of capital, less government regulation, flexibility, and taxation benefits where the partnership itself is not taxed.

What are the disadvantages of a partnership as mentioned in the script?

The disadvantages of a partnership include unlimited liabilities for general partners, potential for management disagreements, and lack of continuity if a general partner passes away.

What is a corporation and what are its main characteristics?

A corporation is an artificial being, invisible and intangible, and is a legally separate entity from its owners. It has perpetual life and can raise capital from the public.

What are the advantages of corporations as discussed in the script?

The advantages of corporations include limited liability, ability to raise large amounts of capital, perpetual succession, and the ability to attract skilled and knowledgeable individuals.

What are the disadvantages of corporations highlighted in the script?

The disadvantages of corporations include the time and expense required to form one, strict government regulations, and double taxation where both the corporation and its shareholders are taxed.

What is the learning objective for the subtopic of forms of business ownership in the script?

The learning objectives are to understand the characteristics of each form of business ownership, to compare the characteristics among sole proprietorship, partnership, and corporations, and to explain the advantages and disadvantages of each form.

Outlines

00:00

🚀 Introduction to Business Ownership Forms

The paragraph introduces the topic of business ownership, focusing on the different forms it can take. It outlines the learning objectives for the video, which include understanding the characteristics of sole proprietorship, partnership, and corporations. It also mentions the need to compare these forms and to explain their advantages and disadvantages. The speaker emphasizes the importance of these topics for anyone interested in becoming a business owner.

05:04

🏆 Sole Proprietorship: Advantages and Disadvantages

This section delves into the concept of sole proprietorship, a business owned by a single individual. It highlights the simplicity of creation, low startup costs, and the absence of complex legal requirements. The owner has complete decision-making power and retains all profits. However, the disadvantages include unlimited personal liability, limited skills and capabilities, restricted access to capital, lack of business continuity, and difficulty in hiring employees due to fewer benefits compared to larger corporations.

10:04

🤝 Partnership: General and Limited Partnerships

The paragraph discusses partnerships, which involve two or more persons sharing the business ownership. It differentiates between general partnerships, where all partners share equally in profits and losses, and limited partnerships, where liability is limited to the amount invested. The advantages include ease of formation, access to more capital, fewer government regulations, and direct distribution of net income to partners, avoiding double taxation. Disadvantages are the potential for unlimited liability, especially in general partnerships, and the possibility of management disagreements.

15:07

🏢 Corporations: Artificial Legal Entity

This part of the script explains corporations as separate legal entities with distinct advantages such as limited liability, the ability to raise capital from the public, perpetual succession, and the attraction of skilled professionals. Corporations provide asset protection for owners and can continue indefinitely, regardless of changes in ownership or shareholder composition. However, forming a corporation is time-consuming and costly, involving government paperwork and regulations. The main disadvantage is double taxation, where corporations are taxed on profits and shareholders are taxed on dividends.

20:11

📚 Summary of Business Ownership Forms

The final paragraph summarizes the different forms of business ownership covered in the script: sole proprietorship, partnership, and corporations. It provides a guide for understanding the characteristics and comparing these forms of ownership. The speaker suggests that after watching this video, viewers should proceed to the next subtopic on franchising as part of the broader topic of becoming a business owner.

Keywords

💡Business Ownership

Business ownership refers to the legal and economic interest one has in a business entity. In the video, it is the central theme, with discussions focusing on different forms it can take, such as sole proprietorship, partnership, and corporations. Understanding business ownership is crucial as it dictates how a business is run, who has decision-making power, and how profits and losses are distributed.

💡Sole Proprietorship

Sole proprietorship is a form of business ownership where one individual owns and operates the business. It is characterized by simplicity in creation, low startup costs, and the ability to make total decisions without consulting others. However, it also comes with unlimited personal liability and limited access to capital. The video script uses this term to illustrate the simplest form of business ownership and its inherent advantages and disadvantages.

💡Partnership

A partnership is a business owned by two or more people who contribute to the business and share in its profits and losses. The video distinguishes between general partnerships, where all partners have unlimited liability, and limited partnerships, where some partners have limited liability. Partnerships offer pooled resources and shared responsibilities but can also lead to disagreements and lack of continuity if a partner leaves or passes away.

💡Corporations

Corporations are legal entities separate from their owners, providing limited liability, access to capital, and perpetual succession. The video script highlights corporations as a complex form of business ownership that allows for raising funds through the sale of stocks and has an indefinite lifespan, independent of its owners. However, corporations are subject to double taxation and require more extensive government regulation and paperwork.

💡Liabilities

Liabilities in the context of the video refer to the debts or obligations that a business or individual must fulfill. Sole proprietorships have unlimited personal liabilities, meaning the owner is personally responsible for all debts. Partnerships may also have unlimited liabilities, depending on the type, whereas corporations provide limited liability protection to their shareholders, shielding their personal assets from business debts.

💡Capital

Capital, as discussed in the video, refers to the funds or resources used to start or expand a business. It can include money, property, or other assets. Sole proprietorships have limited access to capital, usually relying on the owner's personal resources. Partnerships and corporations can attract more capital due to the involvement of multiple investors or shareholders.

💡Franchise

Although not deeply explored in the provided script, a franchise is mentioned as a subtopic. A franchise is a type of business ownership where a person or group buys the right to market a company's products or services in a specific area. It is a way of expanding business operations while maintaining a unified brand and business model.

💡Organization Chart

An organization chart is a visual representation of the structure of an organization, showing how various positions and departments relate to one another. The video script suggests that organization charts are important for understanding the hierarchy and flow of authority within different types of business ownership.

💡Advantages

Advantages, as used in the video, refer to the benefits or positive aspects associated with each form of business ownership. For instance, sole proprietorships have the advantage of simplicity and direct control, while corporations offer the advantage of limited liability and access to a large pool of capital.

💡Disadvantages

Disadvantages are the negative aspects or potential drawbacks of each form of business ownership. The video outlines several disadvantages, such as unlimited personal liability for sole proprietorships, the possibility of management disagreements in partnerships, and double taxation for corporations.

💡Learning Objectives

Learning objectives are the specific goals or competencies that the audience is expected to achieve after watching the video. The script mentions that the audience should understand the characteristics of each form of business ownership, compare these characteristics, and explain the advantages and disadvantages of each form, which are the learning objectives set for the video's content.

Highlights

Discussion on forms of business ownership

Learning objectives for understanding business ownership characteristics

Comparison of characteristics among sole proprietorship, partnership, and corporations

Advantages and disadvantages of different business ownership forms

Definition and characteristics of sole proprietorship

Advantages of sole proprietorship including simplicity and low startup costs

Disadvantages of sole proprietorship such as unlimited personal liability

Definition and types of partnership in business ownership

Characteristics of a general partnership including unlimited liabilities

Characteristics of a limited partnership with limited liabilities

Advantages of partnerships including ease of formation and access to capital

Disadvantages of partnerships such as unlimited liability and potential for management disagreements

Definition and nature of corporations as a separate legal entity

Advantages of corporations including limited liability and ability to raise capital

Disadvantages of corporations such as complexity and double taxation

Importance of understanding the legal and financial aspects of business ownership

Continuity and perpetual life of a corporation

Transcripts

foreign

organizations and Entrepreneurship right

today we will discuss on the topic of

becoming an owner this up topic today of

the form of business ownership

you know in terms of the topics of the

becoming and honor today we will discuss

on the main sub topic that are the first

one the forms of the business ownership

the second should be the franchise and

the last one should be the type of

organization charts

before our discussions today on the

subtopic of the forms of business

ownership right I would like you guys to

know the learning objective of these

subtopics alright and you need like a to

check yourself after you complete it

each topic that you can meet the

mentions learning objective here

the first learning objective of the

subtopics that I expect you guys is I

expect you like a need to make sure that

you understand the characteristic of

each form of business ownership that are

one the first one for the first form

should be a Soul's proprietorship the

second form should be a partnership and

the last one a corporations

and you can see here the second learning

objective is that I expect you can

compare compare what I expect you can

compare the characteristics among the

three form the three form should be a

source proprietorship

a partnership and corporations right

okay for the learning objective here for

this sub-topic the third learning

objective I expect you can explain the

advantages and disadvantages of its form

of business ownership the fourth and FIB

learning objective right will be

included in the second and third

sub-topic of this lessons that are

franchise and developing and

organization chart well in the topic of

becoming an owner there are three main

sub-topics here that are the first that

I mentioned earlier that the form of

business ownership right and the second

sub-topic of these lessons should be the

franchise and the third one the third

sub talk Peak should be the organization

chart okay you guys we will start with

the first subtopic that is the forms of

business ownership and the other topics

will be discussed in the next video clip

in terms of the form of business

ownership

there are three main forms of business

ownerships right the first form that I

expect you like a family of it should be

the sole's popular ship right and the

second form right the second form should

be a partnership and the last form of

business ownership here is corporations

well we will start from source

propulship

as I mentioned earlier that the first

type of business ownership is the sole's

popular ship right

what is the source popular ship you may

have the questions in your mind

so at this time I want like a new Family

Video Source popular ship that is a kind

of business

that owned by an individual

you can notice that the keyword that I

said of the Soul's popular ship is an

individual

let's see the advantages of souls

popular shift there are a number of

advantages of source proprietorship

form of business ownership is simple to

create as you can see here because only

one person can attribute the business

the low startup fee is the other

advantage of the owner

who pay nodding for any legis situations

right there are no special legal less

treatments of this type of business

ownership

and another advantage of social support

pure ship is total decisions making

because you know there is only one

person's only you guy right who is the

owner of business

and again because there is only one

person only you guy who is the owner of

the big snacks

the business owner do not share profits

to other people or to business partner

or to shareholders

therefore this form of business

ownership is a kind of profit incentive

right a profit incentive and the last

advantage of the source proprietorship

you can see here that is easy to

terminate

in another word is easy to discontinue

the business

as the previous slide that shows popular

chip form has a number of advantages

right

you know on the opposite side in terms

of these advantages of souls

proprietorship

there are a number of disadvantages as

well

because the sole proprietorship is the

type of business owner that only one of

an individual right you can see here

again

the only one of an individual right can

establish the business

you can see here the first disadvantages

of this phone the first disadvantages of

the source popular ship is unlimited

personal libraries

what is the liabilities

liability is for example like you borrow

the money from a bank

the money that you borrow from the bank

we call debt the EBT we call debt or

liabilities

because you are the owner of the

business right during the lead sessions

period you probably cannot return the

money timely to the bank

so the bank will force your guide to

sales all of your assets such as your

motorcycles your car your house in order

to list the money and return the money

to the bank you cannot share the

liability or the debt with others

because you are so popular ship the

second disadvantage of solves popular

ship is limited skill and capability of

the owner

because you are the only one persons who

is business owner right

so you are probably good at selling your

products or service but you know you are

like a probably not good at how to

produce the products right so that why

uh this is the second disadvantages of

the sole proprietorship that is limited

skill and capability of the owner

you can see here the third disadvantage

of seoul's popular ship is limited

access to Capital

right you may like a

have some questions what is the capital

the capital here is the money or any

kind of access that you need in order to

start your business in order to produce

your products or service that here we

call Capital or money money is a kind of

capital as well

again again yes because you are the only

one person right who is the business

owner

and you cannot list money from other or

from publics

the lack of continuity for the business

is the fourth disadvantage of souls

partnership

why because this type of business

ownership is easily to terminate

therefore it lack of continuity for the

business right

and you can see here the last

disadvantage of the source property ship

is that it is difficult to hide employee

to hide that stuff comparing with what

comparing with other type of business

ownership for example like a

corporations

you probably cannot provide other

business such as you know health

insurance to your staff the employee

prefer to work for larger company for

other benefits as well here you are at

this point we finished the first type of

business ownership that is the sole's

popular ship

well partner is the second type of

business ownership

what is the partnership

the partnership is an association of two

or more persons

the keyword is that two or more persons

right the partnership is an association

of two or more persons who attributes a

business together as core business owner

each partner you know is partner

contribute like that we call it capital

that might be money properties labels

skill for business profit

you can notice here the keyword of the

partner that is an association of two or

more persons

actually there are two types of

partnership

the first type here you can see uh The

Business Partnership is a general

partnership

and the second type of Business

Partnership is the limited partnership

okay I will introduce you to Familia

with the general partnership what is the

general partnership

the general partnership means each

partner participate in and profits and

losses equally or to sums a great

pleasure

the key word here is

equally or to some degree ratio right

the main characteristics of the general

partnership is one is unlimited

liabilities

what does this mean

the unlimited liabilities

the meaning of the unlimited liabilities

are the general partner need to less

punishable for all that right all

liabilities of the business

here you are there's a good type of

Business Partnership that is limited

partnership

The Limited punishable refers to Limited

the less possibility for the business

liabilities up to amount of that

investment

however you know unlimited partnership

must have at least one General partner

right currently we already understand

the differences between general

partnership and limited partnership at

this point we will move to the

advantages and disadvantages of the

Business Partnership here you are we

will start with the advantages of

Business Partnership

partnership is like a Soul's popular

ship that the partnership form is easy

and inexpensive right to extra

in terms of capital for now you already

understand what does it mean to Capital

right in terms of capital the

partnership form can significantly

broaden the pool of money or Capital to

the business

since the Business Partnership need to

have at least one General partner right

therefore this form can attract the

another limited partner

because the main characteristics of

limited partner is limited liabilities

many individuals find that it is very

profitable to invest as limited

partnership in high potential small

businesses

there is a little government regulations

comparing with corporations

this business owner form is more

flexible than corporations

okay you can see here in terms of

Taxation

the partnership is not subject to be

taxed as business text

because you know the net income of the

business

distribute directly to the partner right

and you are individual

the partner pay only the income tax as

their personal annual income

not business tax

we now move to the disadvantages of the

Business Partnership form

there are some disadvantages of

partnership form

instance unlimited liabilities in case

of UI general partnership

since the partnership form is not the

source prop dealership right it is an

association of two or more persons that

I mentioned earlier

therefore there is business form content

management disagreement

right and last disadvantages of the

Business Partnership is like the Soul's

popular ship that

lack of continuity

if the general partnership passed away

can you imagine there is probably no

successor

at this test we complete the second form

of the business owner that is Business

Partnership

we will continue the third form of the

business owner that is corporations

here you are the last form of business

owner that is the corporations

a corporations and artificial being

invisible and intangible

as Corporation is supplied legal entity

apart from the individual who owned

corporations

you can notice the keyword here legally

separate and apart form its owner

in terms of the advantages of the

corporations

the corporations contain several of

advantages

the main advantages of the corporation

is limited liabilities

you already understand what does it mean

their diabetes

liabilities in another world is that the

EBT right as the legal the corporations

form protects assets of the owners

because of the most effective form of

ownership as corporations

this form the cooperation is Right

countless Rush amount of money or

capital from publics

and because of the legal again because

of the legal the corporations form

Ed Perpetual life of the business

this is the key advantages of the

corporations

you can see here a corporationist right

can like excess asset Supply legal

structure apart from the father as I

mentioned in the previous slide

what does this mean the Perpetual life

the Perpetual life refers to continue

the business forever

right I mentioned the Perpetual right

referred to continue the business the

keyword is forever

because the corporations form is a

supply legal entity the business can

continue because the owner or

shareholders can transfer the ownership

to others

and here you are the last advantages of

Corporations

can draw the skill the expertise the

knowledge people into your firm into

your organizations

we will move to the disadvantage of the

corporations as the next slide

even the corporations contains plenty of

advantages

the corporations provide a number of

disadvantages as well

you know in order to establish the

corporations they are caused in time

consume as the first disadvantages of

these four

it is difficult and expensive to form a

corporation

corporations need to submit papers as

the government regulations

and I want to mention here the main

disadvantage of the cooperation is

double taxations how is the corporate

chart double text firstly government

chart corporate tax from the performance

of the company as one point right the

government chart the corporate tax from

the profits of the business

of the corporations

the corporations

page dividend to individual shareholders

the shareholders need to pay dividend

tax as another point

so you can see here the dividend tax is

the second tax that government chart

at this point we complete all the form

of business owner that are Source

property ship partnership and

cooperation in additions the guide

I provide you the characteristics

comparisons of the three form business

owner for your more understanding after

you complete this video clip I suggest

you guys follow the second sub-topic of

franchise that is the second sub topic

of becoming an owner