Title: Describe common types of business ownership.
Course: Entrepreneurship (12053-I) > Section: Understanding Business Ownership

Description should include the definition, examples, and legal ramifications for the major types of business ownership:

- Sole proprietorship—owned by one person
- Partnership (general and limited)—owned by a small group of people, usually two or three
- Corporation (e.g., LLC, S-Corp, benefit corporation)—owned by a number of people, operated under written permission from the state, with a separate legal personality from its owners
- Franchise—business opportunity that 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 each type of business ownership?
- Why is sole proprietorship such a popular choice of business ownership?
- How does franchising allow an individual to operate his/her own business?
- Why do most business consultants encourage entrepreneurs to incorporate?
- What type of business ownership classification would be most appropriate for the student's dream business? Why?
- What are the legal responsibilities for an entrepreneur's selected business in the local community?
- Why is it essential to know local legal responsibilities before starting a business?
- Why is drafting a partnership agreement essential when forming a partnership?
- What is unlimited liability? How does unlimited liability affect a business owner?
- How do shareholders participate in business operations?