Introduction

When forming businesses, business owners have to decide which type of business works best for their needs. Tax responsibilities, spending decisions, liability, and overall responsibility are all issues a potential business owner must consider when choosing from the basic types of businesses.

In this lesson, you will learn the structure, advantages, and disadvantages to sole proprietorships, partnerships, and corporations. You will also learn about limiting the liability of a company by creating an LLC or S corporation. The benefits of a franchise will also be discussed.

 

 

 

 

Lesson Objectives

Following successful completion of this lesson, students will be able to:

  • compare types of business firms, including sole proprietorship, partnerships, and corporations.
  • list the advantages and disadvantages of each type of business.
  • recognize the role of economic institutions, including labor unions and nonprofit organizations, in market economies.
  • explain the role of profit as an incentive, including short-term versus long-run decisions, for all firms.
  • explain ways firms finance operations, including retained earnings, stocks, and debt, and the advantages and disadvantages of each.

The above objectives correspond with the Alabama Course of Study: Economics objectives: 7, 7.1, 7.2, 7.4, 7.6.

 

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