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Chapter 8 Free Enterprise

What is the most common form of a business organization in the US?
Sole Proprietorships
What percentage of all businesses in the US are sole proprietorships, according to the IRS?
75%
Are most sole proprietorships large, medium, or small in size of revenue generation? What percentage of US sales do sole proprietorships generate?
Small- only 6%
What is the most popular type of firm in the US?
Sole Proprietorship
Is a sole proprietorship easy to establish?
Yes
__ __-__ is one of the main advantages of a sole proprietorship.
Easy Start-up
Just about anyone can start a sole proprietorship if your are willing to complete a small amount of __ and pay the __ expense to start the business.
Paperwork, legal
The paperwork only takes a __ or __ to complete.
Day, two
Sole proprietorships typically must meet three minimum requirements:
Authorization (business license), site permit, name of business
What form of business is the least regulated?
Sole Proprietorship
Name two kinds of regulations that a sole proprietorship might subject to follow:
Health codes, zoning laws
Who gets to keep all of the profits (after taxes) in a sole proprietorship?
The owner of the business
How does the ability to make fast, flexible decisions benfit a sole proprietor?
It allows them to take full advantage of sudden opportunities
If a sole proprietor wants to discontinue their business, they must first:
a) pay any __
b) any other obligations like __
debts, taxes
List three major disadvantages of sole proprietorships:
Unlimited personal liability, limited access to resources, lack of permanence
an estaqblishment formed to carry on commercial enterprise
Business organization
a business owned and managed by a single individual
sole proprietorship
authorization to start a business issued by the local government
business license
law in a city or town that designates separate areas for residency and for business
zoning laws
the legally bound obligation to pay any debts
liability
payment other than wages or salaries
fringe benefit
a business owned by two or more persons who agree on a specific division of responsibilities and profits
partnership
partnership in which partners share equally in both responsibility and liability
general partnership
partnership in which only one partner is required to be a general partner
limited partnership
partnership in which all partners are limited partners
Limited Liability Partnership (LLP)
a partnership agreement
articles of partnership
act ordering common ownership interests, profit and loss sharing, and shared management responsibilities in a partnership
Uniform partnership act (UPA)
money and other valuables belonging to an individual or business
assets
a legal entity owned by individual stockholders
corporation
a certificate of ownership in a corporation
stock
a formal contract to repay borrowed money with interest at fixed intervals
bond
the portion of corporate profits paid out to stockholders
dividend
the combination of two or more firms involved in different stages of producing the same good or service
vertical merger
share of earnings given as a payment
royalties
retail outlet owned and operated by consumers
consumer cooperative
cooperative that provides a service, rather than a good
service cooperative
agricultural marketing cooperative that helps members sell their products
producer cooperative
institution that functions much like a business, but does not operate for the purpose of generating profits
nonprofit organization
nonprofit organization that works to improve the image, working conditions, and skill levels of people in particular occupations
professional organization
nonprofit organization that promotes collective business interests for a city, state, or other geographical area, or for a group of similar businesses
business association
nonprofit organzation that promotes the interests of a particular industry
trade association
Partnerships agree on a specific __ of __ and __.
division, responsbility, profits
In the US, partnerships account for about __ percent of all business.
7
Partnerships generate about __ percent of all sale and about __ percent of all income
5, 10
What is the most common type of partnership?
General Partnership
In a limited liability partnership __ partners are limited partners.
all
What are the four most common types of LLPs?
Attorneys, physicians, dentists, accountants
Limited liability partners are not usuall liable for other partner’s __.
Mistakes
How does a corporation differ from a sole proprietorship or partnership?
Corporations continue after the death of their owners and are owned by shareholders
How does a business franchise work?
It pays fees to a parent company in order to sell its goods in a specific area

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