Recreation Systems
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Transcript of Recreation Systems
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Recreation Systems
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The 3 SectorsCommercial
PublicNonprofit
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Commercial Sector
3 basic forms: Sole proprietor Partnerships Corporations
Franchises
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Sole Proprietor One owner Unlimited liability
Personally held liable for any debt or legal problems
Can lose an unlimited amount of money
Sue business & owner Advantages & disadvantages….
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Sole ProprietorshipAdvantages Disadvantages
Total control over decision making Limited managerial experience
Revenues taxed only once (corporate tax exempt)
Unlimited personal liability
Great flexibility Limited access to capital funds
Easy to form Investors will not invest in SPAll profits retained by owner 80% failEasy to sell
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Partnership Two or more entities
Least popular form of ownership
Have written agreement of each owners’ responsibilities
4 types of partners….
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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
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4 forms of Partnerships 2. Limited Partnership
Also, very common One or more partners can be limited
One partner must not be a limited partner, but GP Limited partner has limited authority Liability based on amount of capital invested Names of limited partners not in name
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4 forms of Partnerships 3. Secret partner
Identity of an owner is unknown to the public
Negative business history Simply doesn’t want to be known
Secret partner can participate in management but has limited financial responsibility based on investment
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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
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Mix of partnerships & company Owners are called members rather
than shareholders Taxed as a partnership
(as income for individual) Has limited liability of a company Easier to form than C or S Corp Dissolves when a member dies or
wants out
LLC & LLP
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PartnershipAdvantages Disadvantages
Some control over decision making
Limited managerial experience
Revenues taxed only once (corporate tax exempt)
Joint unlimited liability (except LLC & LLP)
Great flexibility Limited access to capital funds
Easy to form When partnership dissolves, entire business must be liquidated
All profits retained by owner Partners must get permission from others to leave business
Easy to sell
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C Corporations
S Corporations
Franchises
Corporations
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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
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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
$2 million in profits made, $1 million reinvested, taxed on $2 million
S Corporations
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CorporationsAdvantages Disadvantages
Unlimited 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
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Franchises Method of doing business, not ownership
1 co. grants another business right & license
3 Forms Trade name
True Value; Western Auto Product distribution
License to distribute product name, car dealers Pure Franchise
Complete business format Products, name, physical plant, marketing Restaurants, Discovery Zone, hotels
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FranchiseAdvantages Disadvantages
Ownership of a small business quickly
Freedom, limited by contract
Product & brand name Cost of initial franchise fee & royalty fees
Support from franchisor
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Public SectorWhere do you find public sector
parks & recreation agencies?
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Public Sector
Tax supported
3 types Federal Agencies State Agencies Local Agencies
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Local Parks & Recreation Municipalities
Cities, townships,
counties, boroughs
Budget from the city…
what source?
Guided by several laws….
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Local Parks & Recreation Enabling laws
State enables local gvts to acquire, develop, maintain rec areas
Set parameters on: What types of gvts can operate rec agencies Authority of agency Fiscal practices Governing board Operational authority
Enables & not mandates
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Local Parks & Recreation Home Rule Legislation
Allows local gvts to control issues at local level without state interference
Power to buy, sell, lease property Levy higher sales taxes Utilize intergovernmental agreements Change structure of government Economic development practices
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?????What is the difference between a parks & recreation department
and a parks & recreation district?
Strengths & weaknesses of each?
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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 IL leads with 2,920….
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Counties Municipalities Townships School Districts Special Rec Districts Fire Protection Highways Health Hospitals
Housing and Community Dev.
Libraries Drainage and Flood Control Irrigation, Water
Conservation Parks and Recreation Sewerage Water Supply Utilities Other Than Water Cemeteries Sewage and Water Supply
IL Special Districts
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State Agencies Est. thru state legislation
State parks & forests
State budget allocations
Focus: Outdoor rec, resource mgt, arts, tourism IL Arts Council, IL Bureau of Tourism
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Federal Agencies Authority from congress
Fed p & r agency focus: Natural resources management Welfare of the people
Budget from congress
NPS, BLM, Historical & Cultural sites, VA, MWR
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Nonprofit SectorWhat are some characteristics of
nonprofit organizations?
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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
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Nonprofit Agencies Federal, sales & property tax
exempt “Unrelated business income taxes”
Special postage rates Not all donations to npo are tax
exempt Exempt from labor unions Nonprofit Corporation…board
liability Types of nonprofits….
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Nonprofit AgenciesOrganization Mission Door County (WI) Sample orgs
501(c)(3) Religious, charitable, or educational & exist for public benefit
American Bowling Congress Inc; Door County Skate Inc; Little League Baseball, Inc; Peninsula Youth Soccer Association
501(c)(4) Civic leagues, social welfare organizations & local associations of employees
Four Seasons; Peninsula Golf Association Inc; Northern Door Volleyball Association Incorporated; Door County Rod & Gun Club Inc; Door Devils Motorcycle Club Inc
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
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Sector issues
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Where do the three sectors get their funding?
What do they do with profits?
Nonprofit Issues
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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
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Commercial Owners, shareholders
NPO Back into agency
Public Into agency or back to city
Where do the profits go?