MOE - Becoming an Owner Part 1/3
Summary
TLDRThe 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
🚀 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.
🏆 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.
🤝 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.
🏢 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.
📚 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.
Mindmap
Keywords
💡Business Ownership
💡Sole Proprietorship
💡Partnership
💡Corporations
💡Liabilities
💡Capital
💡Franchise
💡Organization Chart
💡Advantages
💡Disadvantages
💡Learning Objectives
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
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