{"id":362,"date":"2015-04-21T20:36:45","date_gmt":"2015-04-21T20:36:45","guid":{"rendered":"https:\/\/courses.candelalearning.com\/masterybusiness1xngcxmaster\/?post_type=chapter&p=362"},"modified":"2024-05-03T15:31:53","modified_gmt":"2024-05-03T15:31:53","slug":"putting-it-together-business-ownership","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-introductiontobusiness\/chapter\/putting-it-together-business-ownership\/","title":{"raw":"Putting It Together: Business Ownership","rendered":"Putting It Together: Business Ownership"},"content":{"raw":"

Synthesis<\/h2>\r\n\"decorative\r\n\r\nNow that you have come to the end of\u00a0this module, you should understand that there is a range of possibilities for structuring, starting, and growing a business. Each choice has its advantages and disadvantages, and there is no single set of choices that will accommodate all businesses. Just knowing that there are choices to be made and a variety of possible paths is critical to the success of any business venture\u2014large or small.\r\n

Summary<\/h2>\r\nIn this module you learned about the various legal forms for a business and the advantages and disadvantages of each. The\u00a0following are key takeaways from this module:\r\n

Choosing an Organizational Type<\/h3>\r\nSole proprietorship, partnerships, corporations, and hybrids (LLC, LLP) are all possible options for the legal formation of a business. Each structure carries risks and rewards, costs and benefits. Which\u00a0form of business ownership is best\u00a0for an individual depends not only upon\u00a0the nature of the business opportunity but also the level of personal exposure to risk the owner is willing to accept.\r\n

Sole Proprietorships<\/h3>\r\nSole proprietorships are the simplest and most common legal structure for a business. These businesses are owned and run by one person.\r\n

Partnerships<\/h3>\r\nA partnership is a single business in which two or more people share ownership. There are two general types of partnership arrangements: general partnerships and limited partnerships.\r\n

Corporations<\/h3>\r\nAlthough not the most common<\/em> form of business ownership, corporations account for the majority of the revenue<\/em> from business in the U.S. They are also the most complex type of organization\u00a0to start and maintain. Types of corporations include C corporations, S corporations, and B corporations.\r\n

Hybrid Forms of Ownership<\/h3>\r\nFortunately there are options that enable the business owner\u00a0to take advantage of limited personal liability and the benefits of partnership or corporate organization. These include the limited liability company (LLC) and limited liability partnership (LLP). Which type of ownership\u00a0an owner selects will largely be determined by the size, objectives, and vision for the business.\r\n\r\nLet's take a look at how these different forms of ownership compare to one another.\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n\r\n
Comparing Characteristics of Business Ownership Types<\/caption>\r\n
Characteristic<\/th>\r\nSole Proprietorship<\/th>\r\nPartnership<\/th>\r\nLLC<\/th>\r\nLLP<\/th>\r\nCorporation<\/th>\r\nS Corporation<\/th>\r\n<\/tr>\r\n<\/thead>\r\n
Owner(s)<\/th>\r\n1 sole proprietor<\/td>\r\n2 or more partners<\/td>\r\n1 or more members<\/td>\r\n2 or more partners<\/td>\r\n1 or more shareholders<\/td>\r\n1 or more shareholders<\/td>\r\n<\/tr>\r\n
Sole authority for decisions<\/th>\r\nYes<\/td>\r\nNo<\/td>\r\nNo[footnote]Yes, if only one member[\/footnote]<\/td>\r\nNo<\/td>\r\nNo[footnote]Yes, if only one shareholder[\/footnote]<\/td>\r\nNo[footnote]Yes, if only one shareholder[\/footnote]<\/td>\r\n<\/tr>\r\n
Easy setup<\/th>\r\nYes<\/td>\r\nYes<\/td>\r\nYes<\/td>\r\nYes<\/td>\r\nNo<\/td>\r\nNo<\/td>\r\n<\/tr>\r\n
Minimal regulations<\/th>\r\nYes<\/td>\r\nYes<\/td>\r\nYes<\/td>\r\nYes<\/td>\r\nNo<\/td>\r\nNo<\/td>\r\n<\/tr>\r\n
Single taxation<\/th>\r\nYes<\/td>\r\nYes<\/td>\r\nYes<\/td>\r\nYes<\/td>\r\nNo<\/td>\r\nYes<\/td>\r\n<\/tr>\r\n
Easy access to expertise<\/th>\r\nNo<\/td>\r\nSomewhat<\/td>\r\nSomewhat<\/td>\r\nSomewhat<\/td>\r\nYes<\/td>\r\nYes<\/td>\r\n<\/tr>\r\n
Easy access to capital<\/th>\r\nNo<\/td>\r\nSomewhat<\/td>\r\nSomewhat<\/td>\r\nSomewhat<\/td>\r\nYes<\/td>\r\nYes<\/td>\r\n<\/tr>\r\n
Limited legal liability<\/th>\r\nNo<\/td>\r\nNo<\/td>\r\nYes<\/td>\r\nYes<\/td>\r\nYes<\/td>\r\nYes<\/td>\r\n<\/tr>\r\n
Unlimited life<\/th>\r\nNo<\/td>\r\nNo<\/td>\r\nPossible<\/td>\r\nPossible<\/td>\r\nYes<\/td>\r\nYes<\/td>\r\n<\/tr>\r\n
Easy transfer of ownership<\/th>\r\nNo<\/td>\r\nNo<\/td>\r\n\u00a0No<\/td>\r\n\u00a0No<\/td>\r\nYes<\/td>\r\nYes<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n

Franchising<\/h3>\r\nFor aspiring business owners who do not have the time, vision, or resources to \"start from scratch,\" franchising is a viable alternative for business ownership. Everyone is familiar with franchises\u2014many\u00a0industries such as fast food are almost wholly comprised of franchises. As appealing as this may seem, there are still risks to franchising for both the franchisor and franchisee.\r\n

Mergers and Acquisitions<\/h3>\r\nOne of the quickest ways for a business to expand into other markets or product lines is either to merge or acquire\/purchase another company. Although this is common in today's business environment, there are still many complex factors to consider\u00a0before deciding whether a merger or acquisition is the optimal solution.\r\n
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Case Study: Native American Industrial Solutions (NAIS) and the sba 8a program<\/h3>\r\nAmong all of the possible ways to structure a business, i.e., sole proprietorship, partnership, corporation, LLC, etc., the Small Business Administration (SBA) has created a special program called \u201c8(a)\u201d designed to help firms owned and controlled by socially and economically disadvantaged individuals.\r\n\r\nThe 8(a) Program is an essential instrument for helping socially and economically disadvantaged entrepreneurs gain access to the economic mainstream of American society. The program helps thousands of aspiring entrepreneurs to gain a foothold in government contracting. Specifically, a SBA 8(a) company gets an edge in winning government contracts.\r\n\r\nNAIS is an American-Indian owned 8(a) firm. They are an IT company specializing in IT Infrastructure, Software Development, Risk Management and Cybersecurity, and Artificial Intelligence and Machine Learning.\r\n\r\n \r\n\r\n\"The\r\n\r\n \r\n\r\nSince its establishment in 2013, NAIS has won government contracts to numerous government agencies, to include: Defense Intelligence Agency, Defense Health Agency, the U.S. Census Bureau, the Federal Aviation Administration, the Federal Highway Administration, the U.S. Army Cyber Center of Excellence, Washington Headquarters Services at the Pentagon, the United States Military Academy at West Point, and the Department of Homeland Security.\r\n\r\nAlthough Cybersecurity and AI are hot business topics these days, NAIC benefited greatly from their 8(a) designation to gain technical and business expertise to capture contracts from these government agencies. For women and minority entrepreneurs, this program could help kickstart a very successful business.\r\n

About the 8(a) program:<\/h2>\r\nTo qualify for the 8(a) program, businesses must meet the following eligibility criteria:\r\n