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Lecture

Lecture 4: Forms of Business Ownership.docx

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Department
Management
Course
MGM101H5
Professor
Nate Charlow
Semester
Fall

Description
Oct 4, 2013 Lecture : Chapter 4 Forms of Business Ownership You want to start a business? Must consider issues of cost, risk, control, legal, administration and  flexibility. Corporation (69%) • Separate legal entity from owner o Must have shareholder, follow rules, etc o Entity itself must file own taxes • Can have several owners o 2 ways owners can get money  Issue of dividend per share • Company not required to payout dividend if don’t want to  Not give out dividends, but make sure shares are being bid up in prices  and sell when share price high (share trading) o Operates separately from owners • Types of corp o Private : not traded on stock exchange (limited to 50 or fewer stockholders)  Chapman’s ice cream = private corp o Public : shares are traded on one or more stock exchanges o Non­Profit : performs public service, has special tax considerations to encourage  formation • How owner’s affect management o Owners/stockholders (elect board of directors)  ▯board of directors (hire officers) ▯   officers(set corporate objectives and select management)  ▯managers(supervise  employees)  ▯employees • Corporate Governance o Refers to process and policies that determine how an organization interacts with  its stakeholders, both internal and external o Corporate governance is (MISSED sentence IT CHECK PPT ) Oct 4, 2013 o As a result of corporate scandals, board members are under increasing scrutiny to  ensure they are effectively fulfilling their roles and responsibilities to their  stakeholders  Be aware that those who serve on boards (both for profit and non­profit)  may be held personally liable for misconduct of organization Sole Proprietorship (24 %) • Combined personal and business (no separate entity) • Advantages o Complete control o Inexpensive o No legal requirements o Quick to start o Convenience and ease • Disadvantages o If business loses money – you lose money o If business gets sued – you get sued • Personal assets becom
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