Title: Identify major types of business ownership.
Course: Make It Your Business (12151-12) > Section: Exploring Entrepreneurship

Identification should include the definition, legal requirements, and examples of the major types of business ownership, such as the following:

- Sole proprietorship—owned by one person
- Partnership (general and limited)—owned by a small group of people, usually two or three
- Corporation—owned by a number of people, operated under written permission from the state, with a separate legal personality from its owners
  - Limited liability company (LLC)—a hybrid form of business that has characteristics of both a corporation and a partnership
  - Limited liability partnership (LLP)—allows partners to enjoy limited personal liability, while general partners have unlimited liability
  - S-corporation—meets specific Internal Revenue Code requirements that give a corporation with 100 or fewer employees the benefit of incorporation while being taxed as a partnership
- Franchise—allows the franchisee to start a business by legally using someone else’s (i.e., the franchisor’s) expertise, ideas, and processes
- Nonprofit corporation—formed to carry out a charitable, educational, religious, literary, or scientific purpose; does not pay federal or state income taxes from activities in which it engages to carry out its objectives
- Cooperative—an association of persons united voluntarily to meet common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled enterprise

Process/Skill Questions:

- What are the advantages and disadvantages of a sole proprietorship? Of a partnership? Of a corporation?
- Which of these business types presents the most risk, and why?
- Why should a partnership agreement be drawn up as a legal document?
- How does one become part owner of a corporation?
- What are the major benefits of a franchise?
- Which type of business is the most common form of ownership in the United States?
- Which form of business ownership would be the best type for a startup venture, and why?