Post on 20-Dec-2015
Sole Proprietorship
Advantages DisadvantagesTotal control over decision making Limited managerial experience
Revenues taxed only once (corporate tax exempt)
Unlimited personal liability
Great flexibility Lasts only as long as the owner lives
Easy to form Limited access to capital funds
All profits retained by owner 80% fail
Easy to sell
Partnership
Two or more entities
Least popular form of ownership
Have written agreement of each owners responsibilities
4 types of partners….
4 forms of Partnerships
1. General Partnership
Common form of partnership
Each partner is fully responsible for liabilities
Share the costs & benefits of the business
4 forms of Partnerships
2. Limited Partnership Also, very common
One or more partners can be limited
Limited partner has limited authority
Liability based on amount of capital invested
Names of limited partners not in name
4 forms of Partnerships
3. Secret partner
Identity of an owner is unknown to the public
Secret partner can participate in management but has limited financial responsibility
4 forms of Partnerships
4. Dormant partner (silent partner)
Invests only money
Not involved in management of the organization
Liable only for the amount of his/her investment
Mix of partnerships & company Taxed as a partnership Has limited liability of a company Easier to form than C or S Corp Dissolves when a member dies or
wants out
LLC & LLP
LLC/LLP
Advantages DisadvantagesSome control over decision making
Limited managerial experience
Revenues taxed only once (corporate tax exempt)
Limited access to capital funds
Great flexibility When partnership dissolves, entire business must be liquidated
Easy to form & sell Partners must get permission from other to leave business
All profits retained by owner
Liability is limited to the LLC/LLP
C Corporations
Seen as a fictional, legal person & can…. Own, manage, & sell property Sign binding contracts Sue & be sued Pay corporation taxes
20% of all businesses & 80% of ave. annual sales
Owners are shareholders Limited liability up to amt of investment Run by a board of directors representing the shareholders
S Corporations Like C Corporation in formation Distributes all profits so that the
corporation isn’t taxed Shareholders are taxed since they get
the profits Only form if ALL profits are distributed
S Corporations
Corporations
Advantages DisadvantagesUnlimited life of corporation Complex formation process
Creditors can’t come after shareholders beyond their investment
Multitude of government regulations
Easy to transfer ownership – just sell stock
Double taxation
Obtain capital through selling stock or borrowing money using company assets as collateral
Financial records are public, privacy lost
Ability to hire broad base of talented managers
Franchises
Method of doing business, not ownership
1 co. grants another business right & license
3 Forms Trade name Product distribution Pure Franchise
Franchise
Advantages DisadvantagesOwnership of a small business quickly
Freedom, limited by contract
Product & brand name Cost of initial franchise fee & royalty fees
Support from franchisor
Local Parks & Recreation Special District laws
Independent governing bodies
Direct taxing & bonding ability
20% of the 31,555 special districts in US relate to natural resources
9 states over 1000 special districts
State Agencies
Est. thru state legislation
State budget allocations
Focus: Outdoor rec, arts, tourism, human
services, education, health
Federal Agencies
Authority & budget from Congress
U.S. Department of Health & Human Services
Morale, Welfare & Recreation
Nonprofit Agencies
Formally constituted for public benefit
Funded through fees, charges, donations &
grants
Private as opposed to governmental (NGO’s)
Not profit distributing, but can make a profit
Self-governing - boards
Nonprofit Agencies
Federal, sales & property tax exempt
Special postage rates Not all donations to npo are tax
exempt Exempt from labor unions Nonprofit Corporation Types of nonprofits….
Nonprofit Agencies
Organization Mission Door County (WI) Sample orgs
501(c)(3) Religious, charitable, or educational & exist for public benefit; amateur sports
American Bowling Congress Inc; Door County Skate Inc; Little League Baseball, Inc; Hospitals; NIFS
501(c)(4) Civic leagues, social welfare organizations & local associations of employees
Four Seasons; Peninsula Golf Association Inc; Northern Door Volleyball Association Incorporated;
501(c)(7) Social clubs organized for recreation & other purposes for the benefit of its members
Door County Golf Association; Sturgeon Bay Yacht Club; Trilliun Quilt Guild
* 20+ nonprofit categories in the IRS code
Sector/ Income Taxes Grants,
donations, sponsorship
s
Fees & Charges
Investment
Contractual
Commercial Sector
Pays them – property, income, sales
Minimal Major source
Major source
Can be a major source
NPO Doesn’t pay or receive
Major source
Major source
Limited, based on available cash
Growing importance
Public Sector
Essential
Growing importance
Major source
Limited, based on available cash
Growing importance
Commercial Owners, shareholders
NPO Back into agency
Public Into agency or city
Where do the profits go?
Organizational Structure
6 elements to address for a proper organizational structure
1. Work specialization2. Departmentalization3. Chain of command4. Span of Control5. Centralization or decentralization6. Formalization
Organizational Structure
1. Work specialization
Division of labor
Jobs broken into steps with multiple people doing their individual part to make the entire product
Assembly lines, McDonald’s
Organizational Structure
1. Work specialization
Advantages Used to increase productivity Allows skill building on the job
Disadvantages Good to a point & then diminishing returns Boredom, absenteeism, stress, high turnover
Organizational Structure
2. Departmentalization Grouping of jobs according to (4):
Function/process
Trainers Group fitness instructors Fitness assessments Research Education
Organizational Structure
2. Departmentalization Grouping of jobs according to (4):
Product Nike: Golf, shoes, clothing REI: Clothing & footwear, snow gear, water gear,
land gear
Geography Gametime – 18 independent U.S. Reps
Organizational Structure
2. Departmentalization Grouping of jobs according to (4):
Customer retail, wholesale, government corporate vs. individual clients physical therapists, athletic trainers
Organizational Structure
3. Chain of command
Unbroken line of authority The right to exercise influence, give
directives or make certain decisions within the organization
Organizational Structure
3. Chain of command Key issues
Unity of Command
Seeing less chain of command with empowerment
Organizational Structure
4. Span of Control # of people, units, & operations a mgr
can control effectively & efficiently
Small span of control – supervise smaller number of people
Larger span of control – supervise larger number of people
Organizational Structure
4. Span of Control # of people, units, & operations a mgr
can control effectively & efficiently
Small span of control – supervise smaller number of people
Larger span of control – supervise larger number of people
Organizational Structure
4. Span of Control
See smaller span of control at top & larger at bottom of org.
7 is optimal but depends on work done
Which is better? Smaller or larger?
Organizational Structure
4. Span of Control Larger – fewer managers, more ee’s
reporting to them Reduces cost, speeds decision making Get closer to the customer Empower employees Fewer layers of employees Invest in training staff
Organizational Structure
4. Span of Control Smaller – more managers with fewer
ee’s Tight managerial control Increase cost of managers Added managers slows
communication Encourages micro-managing &
discourages ee autonomy
Organizational Structure
5. Centralization or decentralization
Degree to which decision making is concentrated at a single point in the organization
Organizational Structure
Centralization
Top managers make all the decisions
Consistency in decision making
Slow process…move up the chain of command
Organizational Structure
Decentralization Decision making is pushed down to mgrs
closest to the action
Quicker actions taken
More people provide input
EE’s less likely to feel alienated from decision makers
Mgrs closer to situation