Econ Chapter 3 Notes
Chapter 3: Business Organizations
This chapter deals with the economic organizations that are found in our economy. Most businesses operate in search of profits. Others are organized and operate like a business, although profits are not their primary concern.
Section 1 deals with the three main forms of business organization. The first is the sole proprietorship, which is a business owned and operated by one person. The second is the partnership, which is a business jointly owned by two or more persons. The third is the corporation, which is recognized as a separate entity having all the rights of an individual. The proprietorship is the most common and most profitable form of business organization. The corporation is the largest and most visible.
The most common form of business organization in the US is the sole proprietorship or proprietorship- a business owned and run by a single individual. Proprietorships are basically one person operations; they comprise the smallest form of business.
The sole proprietorship is the easiest form of business to start because it involves almost no requirements except for occasional business licenses and fees.
ADVANTAGES
A sole proprietorship is easy to start up. Management is also relatively easy because decisions do not require the approval of a boss. This flexibility means that the proprietor can make an immediate decision if a problem comes up.
Owners can keep the profits of successful management without having to share them with other owners.
Proprietorship does not have to pay separate business income taxes because the business is not recognized as a separate legal entity. The owner still must pay individual income taxes on profits taken from the sole proprietorship but the business itself is exempt from any tax on income.
The proprietorship is the psychological satisfaction many people get from being their own boss. The last advantage would be that it is easy to get out of business. All the proprietor has
This chapter deals with the economic organizations that are found in our economy. Most businesses operate in search of profits. Others are organized and operate like a business, although profits are not their primary concern.
Section 1 deals with the three main forms of business organization. The first is the sole proprietorship, which is a business owned and operated by one person. The second is the partnership, which is a business jointly owned by two or more persons. The third is the corporation, which is recognized as a separate entity having all the rights of an individual. The proprietorship is the most common and most profitable form of business organization. The corporation is the largest and most visible.
The most common form of business organization in the US is the sole proprietorship or proprietorship- a business owned and run by a single individual. Proprietorships are basically one person operations; they comprise the smallest form of business.
The sole proprietorship is the easiest form of business to start because it involves almost no requirements except for occasional business licenses and fees.
ADVANTAGES
A sole proprietorship is easy to start up. Management is also relatively easy because decisions do not require the approval of a boss. This flexibility means that the proprietor can make an immediate decision if a problem comes up.
Owners can keep the profits of successful management without having to share them with other owners.
Proprietorship does not have to pay separate business income taxes because the business is not recognized as a separate legal entity. The owner still must pay individual income taxes on profits taken from the sole proprietorship but the business itself is exempt from any tax on income.
The proprietorship is the psychological satisfaction many people get from being their own boss. The last advantage would be that it is easy to get out of business. All the proprietor has