ERIC ED373202: Types of Ownership. Unit 7. Level 1. Instructor Guide. PACE: Program for Acquiring Competence in Entrepreneurship. Third Edition. Research & Development Series No. 301-07.

20 Pages·1994·0.43 MB·English

by  ERIC

DOCUMENT RESUME
CE 067 036
ED 373 202
Types of Ownership. Unit 7. Level 1. Instructor
TITLE
Guide. PACE: Program for Acquiring Competence in
Entrepreneurship. Third Edition. Research &
Development Series No. 301-07.
Ohio State Univ., Columbus. Center on Education and
INSTITUTION
Training for Employment.
PUB DATE 94
21 units, each done
20p.; For the complete set, i.e
NOTE
,
.2:c: 067 029-092. Supported by the
at three levels,
International Consortium for Entrepreneurship
Education, the Coleman Foundation, and the Center for
Entrepreneurial Leadership Inc.
Center on Education and Training for Employment, 1900
AVAILABLE FROM
Kenny Road, Columbus, OH 43210-1090 (order no.
RD301-07 IG, instructor guide $4.50; RD301-07 M,
student nodule, $3; student module sets, level
1--RD301M, level 2--RD302M, level 3--RD303M, $45
each; instructor guide sets, level 1--RD301G, level
2--RD302G, level 3--RD303G, $75 each; 3 levels and
resource guide, RD300G, S175).
Teaching Guides (For
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Teacher)
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Behavioral Objectives; *Business Education;
DESCRIPTORS
*Competency Based Education; Corporations;
*Entrepreneurship; Learning Activities; *Ownership;
Pos:_secondary Education; Secondary Education; *Small
Businesses; Student Evaluation; Teaching Guides
*Program for Acquiring Competence Entrepreneurship
IDENTIFIERS
ABSTRACT
This instructor guide for a unit on types of
ownership in the PACE (Program for Acquiring Competence in
Entrepreneurship) curriculum includes the full text of the student
module and lesson plans, instructional suggestions, and other teacher
into this module
resources. The competencies that are incorporated
1 of learning--understanding the creation and operation
are at Level
of a business. Included in the instructor's guide are the following:
unit objectives, guidelines for using PACE, lists of teaching
suggestions for each unit objective/subobjective, model assessment
PACE program. The
responses, and overview of the three levels of the
following materials are contained in the student's guide: activities
to be completed in preparation for the unit, unit objectives, student
reading materials, individual and group learning activities, case
study, discussion questions, assessment questions, and references.
Discussed in the unit are the various advantages and disadvantages of
sole proprietorships, partnerships, and corporations as forms of
business ownership.
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UNIT 7
LEVEL 1
Unit 7
Types of Ownership
Level 1
HOW TO USE PACE
Use the objectives as a pretest. If a student
is able to meet the objectives, ask him or
her to read and respond to the assessment
PA E
questions in the back of the module.
Program for Acquiring
Competence in
Entrepreneurship
THIRD EDITION
Duplicate the glossary from the Resource
Guide to use as a handout.
CENTER OH EDUCATION
AND TUNING FOR EM91.011IEKT
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Istpott ill sent,
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l`k
Use the teaching outlines provided in the
Instructor Guide for assistance in focusing
ihe left side of
your teaching delivery.
Objectives:
each outline page lists objectives with the
corresponding headings (margin questions)
from the unit. Space is provided for you to
add your own suggestions. Try to increase
Describe sole proprietorships, partnerships, and corpo-
student involvement in as many ways as
rations.
possible to foster an interactive learning
process.
When your students are ready to do the
Activities, assist them in selecting those
Identify the advantages and disadvantages of proprie-
that you feel would be the most beneficial
torships, partnerships, and corporations.
to their growth in entrepreneurship.
DE{ AF1T1.,EvT
Assess your students on the unit content
E Oa/ A...y-1!
"PERMISSION TO REPRODUCE THIS
MATERIAL HAS BEEN GRANTED BY
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when they indicate they are ready.
You
1G71(
(31
may choose written or verbal assessments
Model re-
situation.
the
according
to
LI
sponses are provided for each module of
0
While these are suggested
TO THE EDUCATIONAL RESOURCES
each
unit.
INFORMATION CENTER (ERIC)
F
responses, others may be equally valid.
2
BEST COPY AVAILABLE
Teaching Suggestions
Objectives
I. DESCRIBE SOLE PROPRIE-
TORSHIPS, PARTNERSHIPS,
AND CORPORATIONS
Use an overhead or chalkboard to outline the types of ownership.
What are the various types of
Include both limited and general partnerships.
ownership?
Ask students if they have family members, friends, or acquain-
What is a sole proprietorship?
students
tances who are the sole owners of their business. Lead
in a discussion on entrepreneurs' needs and capabilities to devel-
op sole proprietorships.
Introduce the concept of partnership by explaining both general
What is a partnership?
and limited partnerships. Use a chart to highlight the differences
between the two forms of ownership.
Give examples of well-known companies which chose corpora-
What is a corporation?
tion as a form of ownership (e.g., Wendy's, McDonald's, Jenny
Craig, The Limited, etc.) to introduce the concept of corporation.
Outline the main characteristics of corporations and define the
notions related to this form of ownership (e.g., offices, board of
directors, stockholders).
2. IDENTIFY THE ADVANTAGES
AND DISADVANTAGES OF
PROPRIETORSHIPS,
PARTNERSHIPS, AND
CORPORATIONS
Encourage students to use individual note cards to list each ad-
What are the advantages of a sole
explained to them.
vantage of sole proprietorships as they are
proprietorship?
Next, quiz students to test their understanding of the concepts.
Refer to above suggestion.
What are the disadvantages of a
sole proprietorship?
the advantages of a
Briefly explain advantages of a partnership.
What are
partnership?
Divide the chalkboard or overhead into two columns. Have stu-
What are the disadvantages of a
dents list advantages of partnership on the left hand-side column.
partnership?
Help them list disadvantages of partnerships in the right hand-
side column.
Teaching Suggestions
Objectives
Invite a local entrepreneur who owns shares in a corporation to
What are the advantages of a cor-
discuss why he/she chose corporation as the form of ownership.
poration?
What are the disadvantages of a
Refer to above suggestion.
corporation?
MODEL ASSESSMENT RESPONSES
Students should be
The following table answers the assessment questions in a comprehensive manner.
encouraged to prepare similar tables in order to better understand the differences, advantages, and disadvantages
between the types of ownership discussed in this unit.
FORMS OF
DISADVANTAGES
ADVANTAGES
OWNERSHIP
1. Unlimited liability
1. Low start-up costs
Sole
2. Lack of continuity
2. Greatest freedom from regulation
Proprietorship
3. Difficulty in raising capital
3. Owner in direct control
4. Lack of assistance
4. Minimal working capital requirements
5. Tax advantage to owner
6. All profits to owner
7. Simplest way to start a business
1. Unlimited liability
1. Ease of formation
Partnership
2. Lack of continuity
2. Low start-up costs
3. Divided authority
3. Additional sources of venture capital
4. Difficulty in raising additional
4. Broader management base and expertise
capital
5. Possible tax advantage
5. Difficulty in finding suitable
6. Limited outside regulations
partners
6. Sharing of profits
1. Close regulation
1. Limited liability
Corporation
2. Most expensive to organize and
2. Specialized management
run
3. Transferable ownership by stock selling
3. Charter restrictions
4. Continuous existence
4. Extensive recordkeeping
5. Legal entity
5. Double taxation and a higher rate
6. Possible tax advantages
of taxation
7. Ease of raising capital
4
Program for Acquiring
'
Competence in
,
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/;y<
')
Entrepreneurship
7
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fmes.
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miimmormi
Incorporates the needed competencies for creating and operating a small business at three levels of learning, with experiences and
outcomes becoming progressively more advanced.
Understanding the creation and operation of a business.
Level 1
Level 2 -- Planning for a business in your future.
Starting and managing your own business.
Level 3
Self-contained Student Modules include: specific ohjectives. questions supporting the objectives, complete content in form of answers
include the full text
to the questions, case studies, individual activities, group activities, module assessment references. Instructor Guides
()leach student module and lesson plans, instructional suggestions. and other resources. PACE,Third Edition, Resource Guide includes
(caching strategies. references. glossary of terms, and a directory of entrepreneurship assistance organisations.
For information on PACE or to order, contact the Publications Department at the
Center on I ducation and Training for Employment. 19(X) Kenny Road. Columbus, Ohio 43210-1090
[phone]. [phone].
Support for PACE, Third Edition provided in whole or in part by:
The Coleman Foui.Jation
International Consortium for Entrepreneurship Education
and
International Enterprise Academy
Center for Entrepreneurial Leadership Inc.
Ewing Marion Kauffman Foundation
Center on Education and Training for Employment
The Ohio State University
UNIT 7
LEVEL 1
Types of
Ownership
Your Potential
Nature of
The
Business
Global Markets
as an
Small Business
Business Plan
Opportunities
Entrepreneur
Help for
Pricing
Marketing
Financing
Location
the
Analysis Strategy
the Business
Entrepreneur
Human
Business
Legal
Promotion
Selling
Resources
Management
Issues
Risk
Customer
Financial
Record
Operations
Management
Analysis Credit
Keeping
Program for Acquiring
Competence in
Entrepreneurship
D
CENTER ON EDUCATION
AND TRAINING FOR EMPLOYMENT
Research & DeN clop-neat Series No. 301-07
COLLEGE OF EDUCATION
THE OHIO STATE UNIVERSITY
TYPES OF OWNERSHIP
BEFORE YOU BEGIN
. .
.
Consult the Resource Guide for instructions if this is your first PACE unit.
1.
If you think
on the following page.
Read What are the Objectives for this Unit
2.
your instructor.
you can meet these objectives now, consult
If you need help with the
this unit.
Look for these business terms as you read
3.
the PACE Glossary contained in the
meanings, ask your instructor for a copy of
Resource Guide.
Officers
Board of directors
Partnership
Business assets
Personal assets
Capital
Personal liabilities
Certificate of incorporation
S corporation
Corporation
Sole proprietorship
Debt
Stockholder/shareholder
Double taxation
Unlimited personal liability
General partnership
Limited partnership
Employment.
1994. Center on Education and Training for
Copyright (
The Ohio State University. All rights reserved.
TYPES OF OWNERSHIP
WHAT ARE THE OBJECTIVES FOR THIS UNIT?
Upon completion of this unit you will be able to
describe sole proprietorships, partnerships, and corporations and
identify the advantages and disadvantages of proprietorships, partner-
ships, and corporations.
small drugstore, a health food shop,
WHAT IS THIS UNIT ABOUT?
a
nursing home, or a restaurant. To find the
best organization for your business, you will
need some understanding of the various
When
you are planning your business. you
types of ownership. These are
must decide which type of ownership would
be best for your business. This unit focuses
sole proprietorship,
on the three major types of business owner-
ship: sole proprietorships, partnerships, and
The characteristics, advan-
corporations.
partnership, and
tages, and disadvantages of each form of
business ownership are discussed. The main
corporation.
purpose of this unit is to help you discover
the advantages and disadvantages of each
form of business ownership. This informa-
WHAT IS A SOLE
tion is helpful when deciding which type of
ownership is best for you and your business.
PROPRIETORSHIP?
WHAT ARE THE VARIOUS
The most common form of business organi-
TYPES OF OWNERSHIP?
Sometimes it
zation is sole proprietorship.
is called the individual proprietorship. This
business has only one owner and is usually
A large manufacturing firm may not need
operated by that person. Often it is run with
the help of a few employees, most likely
the same form of business organization as a
Sole proprietorships can
family members.
=11.11
4
WHAT IS A PARTNERSHIP?
capital resources
operate with very little
Sole proprietorships exist in a
(money).
great variety of businesses. These may in-
clude the neighborhood beauty parlor, bike
Next to the sole proprietorship, the partner-
repair shop, restaurant, or newsstand.
ship is the least complicated way to begin
and operate a business. A partnership is a
The sole proprietorship is the least compli-
business that has two or more co-owners.
It is the easiest
cated form of organization.
Often, but not always, a partnership is form-
Entry re-
to enter into and to terminate.
ed when a sole proprietor takes on additional
quires a location, expertise in an area of
These additional owners help in
owners.
business, a source of capital, the ability to
certain areas of expertise or skill. They may
make contracts, sometimes a license, and the
also aid in expanding the business by pro-
desire to start your own business. Termina-
viding an additional source of capital, since
tion generally requires only paying your
in most cases two people have or can borrow
debts and closing the doors.
Partnerships
more money than one person.
business from
are found in every type of
Forming a
auto repair shops to law firms.
partnership may be a good choice for many
businesses, especially those that require more
skills or capital than one person can provide.
5
General Partnership
'Each owner has the right to participate in the
management of the business
Limited Partnership
Limited paltrier cannot participate in the
management of the business
most that limited partners can lose if the
general
There are two types of partnership
business fails is the amount they have in-
In a
partnerships and limited partners, ips.
Their personal as-
vested in the business.
general partnership, all the owners are gen-
sets, such as their car and home, will not be
As general partners, each
eral partners.
owner has the right to participate in the
used to pay business debts.
management of the business, as well as to
participate in the profits of the business.
WHAT IS A CORPORATION?
The general partners are personally liable for
all the debts of the business.
Limited partnerships, on the other hand,
are the most complicated way
Corporations
general part-
have two classes of partners
to begin and operate a business. A corpora-
ners and limited partners. General partners
tion is an entity created by state laws for the
in a limited partnership have the same rights
purpose of doing business. The corporation
and liabilities as they would in a general
may have more than one owner. The law
Limited partners have much
partnership.
treats the corporate entity like a person com-
different rights and liabilities. They are not
pletely separate from its owners. The corpo-
allowed to participate in the management of
ration is given the power to transact busi-
Because they do not
the business at all.
ness, enter into contracts, and sue or be sued
manage the business, they are not personally
The corporation can
its own name.
in
liable for the debts of the business.
The