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ACCOUNTING: The Language of Business

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5 Types Of Business

Co-Operatives

Almost every single business in Canada has been adapted to be a Co-Operative. There are 3 tyoes of Co-Operatives

Worker Co-Operatives

Retail Co-Operatives

Consumer Co-Operatives

An advantage is if you put in a certain amount of money, the employee will receive a dividend 5x the amount of money that they invested.

The disadvantage of the Co-Operative is that members of the board of directors are only granted one vote regardless of the amount of shares they own in the business.

A Co-Operative business also has a board of directors who are members of the Co-Operative

A Co-Operative doesn't sell products but sells services to the consumer.

A Co-Operative is a business that is owned by the workers who buy products or use the services that the business offers.

Corporations

A dividend is a check that is used to pay for each of the shares.

Another advantage is if the Corporation fails, the share holders will only be in debt for the amount of money they invested into the shares.

Share Holders have limited liabilities, this means that they can't be held responsible legally for the debt of the Corporation. This is an advantage because it encourages more people to buy shares.

Since there are many owners to a Corporation a Board of Directors is put into place to run the Corporation.

People who individually buy shares become the owners of the company, these people are called Shareholders. The more shares that a share holder has the more he owns the company.

Shares or Stocks are when the Corporation is owned by several small groups. Once the Corporation has been sold it becomes a publicly traded Corporation.

A disadvantage of a small group responsible for the Corporation is that it can't be managed if it is being owned and funded by one or two people.

Not all Corporations are multinational, most Corporations are owned by individuals, families or small groups.

Corporations can be as small as one man or as large as a multinational, this is also refereed to as transnational.

A Corporation is a business that has been granted legal status rights, privileges, and liabilities that are different from the people who work at this type of business.

Partnerships

The major advantage of a partnership is the relationship between the partners. For example one partner can be the sales expert and the other could be the order inventory. This shows that the partners can work different roles in the business.

Another type of partnership is a Limited Partnership, in this form of partnership, both partners have a Limited Liability, this means one partner is accountable for the business debt.

In a General Partnership both individuals have unlimited liability. This means that both partners are held responsible for the other partners business debts.

A General Partnership is the most common form of a business partnership.

A partnership agreement is a contract made between 2 or more partners in a partnership which lays out the terms and conditions of the partners relationship, including their: Percentages of ownership and distribution of profits and losses.

They record the terms of their partnership in a partnership agreement

A Partnership is a business that is run by 2 or more individuals, who would like to share the expenses and the responsibility of running a business.

Sole Proprietorships

Unlimited Liability is the biggest disadvantage of starting a business on your own.

Since they're responsible for everything in the business, if the business does poorly they would be the only one held responsible for the losses. This is called Unlimited Liability.

On the contrary because the business is a Sole Proprietorship the owner is responsible for everything in the store.

They buy the merchandise them self and sell the merchandies on their own. They take all roles in a business such as the founder, the employee, the janitor, the accountant and etc.

A Sole Proprietorship is a business that is owned by one person. They own everything in the store.

Franchises

The franchiser and the franchisee are independant business that work together for this agreement only. This can be thought as a hybrid form of business ownership

A franchisee buys license to run a ready made business, and is often provided with a fully functional facility.

In a Franchise operation, one business, the Franchiser, licences the rights to its name, operating procedure, designs and business expertise to another business.