ENTREPRENEURSHIP

YEAR 9
TOPIC: Setting Up a New Enterprise
SUB-TOPIC Types or Forms of Business
DURATION: 45 Minutes Per Lesson
NUMBER OF LESSON 2
WEEK / DATE 6 (9th – 13th October, 2023)
BY: JOSHUA ACQUAAH
 By the end of the lesson, students will be able to:

Identify some types of business

Lesson
Objectives
organizations.
Describe the key characteristics
of some business organization.
 A business entity is an organization that
uses economic resources to provide
goods or services to customers in
exchange for money or other goods and
Business services.
Organization Business organizations come in different
types and in different forms of ownership.
What form your business adopts will affect
a multitude of factors, many of which will
decide your company’s future.
  Aligning your goals to your business organization
type is an important step, so understanding the
pros and cons of each type is crucial.
 Note, there is no sharp distinction between the
use of type and form.
Business
 However, for purposes of this lesson, we will
Organization assign:
a. Type to differentiate between businesses that
provide services and those that provide products.
b. Form will look at the nature of ownership of the
business.
 Merchandising
Manufacturing
Business – buy
Business – make the
products at
product from raw
wholesale price and
materials they buy.
sell at retail price.

Types of
Hybrid Business –
Business Service Business – they posses the
Intangible products. characteristics of
Organization E.g. salons, schools, one or more stated
banks etc. type. E.g.
Types of Restaurants
Business
Organization
 Sole
Proprietorship

Forms - based on
Ownership Style
Partnership

Forms of Corporation
Business
Limited Liability
Company (LLC)

Franchise
Sole Proprietorship Advantages Disadvantages
 All profits are subject to
The simplest and most
common form of business
the owner  Owner is 100% liable for
business debts
ownership, sole  There is very little
proprietorship is a business regulation for  Equity is limited to the
owned and run by proprietorships owner’s personal resources
someone for their own
 Ownership of
benefit.  Owners have total proprietorship is difficult to
flexibility when running transfer
The business’ existence is the business
entirely dependent on the  No distinction between
owner’s decisions, so when  Very few requirements personal and business
the owner dies, so does for starting—often only income
the business. a business license
Partnership Advantages Disadvantages
These come in two types: general
and limited.
 Shared resources provides
In general partnerships, both more capital for the
owners invest their money, business  Each partner is 100%
property, labor, etc. to the responsible for debts and
business and are both 100% liable  Each partner shares the
for business debts. total profits of the losses
company  Selling the business is
Limited partnerships require a
formal agreement between the  Similar flexibility and difficult—requires finding
partners. simple design of a new partner
proprietorship  Partnership ends when any
Limited partnerships allow
partners to limit their own liability  Inexpensive to establish a partner decides to end it
for business debts according to business partnership,
their portion of ownership or formal or informal
investment.
 Advantages Disadvantages
Corporation
 Limits liability of the  Corporate operations
Corporations are, for tax are costly
purposes, separate entities and owner to debts or
losses
are considered a legal person.  Establishing a
This means, among other things,
 Profits and losses corporation is costly
that the profits generated by a belong to the
corporation are taxed as the corporation  Start a corporate
“personal income” of the
 Can be transferred to business requires
company.
new owners fairly easily complex paperwork
Then, any income distributed to  Personal assets cannot
the shareholders as dividends or
 With some
profits are taxed again as the be seized to pay for exceptions, corporate
personal income of the owners. business debts
income is taxed twice
Limited Liability Advantages Disadvantages
Company (LLC)
Similar to a limited • Ownership is
partnership, an LLC
• Limits liability to limited by certain
provides owners with
limited liability while the company state laws
providing some of the owners for debts or • Agreements must
income advantages of a losses be comprehensive
partnership. and complex
• The profits of the
Essentially, the advantages LLC are shared by • Beginning an LLC
of partnerships and the owners without has high costs due
corporations are combined double-taxation. to legal and filing
in an LLC, mitigating some
of the disadvantages of fees
each.
Homework
(Essay) 1. Discuss why it is better to set up a
business as a Partnership than a
Corporation.
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