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A business may be privately owned in three different forms. These forms are the sole proprietorship, the partnership and the corporation. The sole proprietorship is the most common in many western countries. For example, more than 80 per cent of all businesses in the United States are sole proprietorships.
But it is evident that sole proprietorships do not do the greatest volume of business. They account for only 16 percent of all business receipts, for example, in America. What kind of business is likely to be a sole proprietorship? First of all, service industries such as Laundromats, beauty shops, different repair shops, restaurants.
Comprehension questions
1. What are three different ways that a business can be privately owned?
2. What forms do most European countries have?
3. What forms do the businesses in the USSR have?
4. Name some businesses that are likely to be sole proprietorships. Why do you think so?
5. Name some businesses that are not likely to be sole proprietorships. Why do you think so?
business
to own
sole proprietorship
partnership
corporation
volume
receipt
service industry
to account for
repair shop
piece of advice
can you give me a piece of advice
I am thinking of starting my own business
responsibility
to make decisions
sole proprietorship
to need a lawyer
it sounds encouraging
to consult partners
a board of directors
to put policies into effect
quickly
to hire
to fire
to decide on vacation, hours, salary, hiring and firing
to have unlimited liability
to be responsible for all business debts
to fail
to declare personal bancruptcy
personal assets
tax benefits
to get tax benefits
accountant
book-keeper
to do books
Lesson 2.
Partnerships.
A Partnership is an association of two or more persons to carry on a business for profit. When the owners of the Partnership have unlimited liability they are called general partners. If partners have limited liability they are limited partners. There may be a silent partner as well-a person who is known to the public as a member of the firm but without authority in management. The reverse of the silent partner is the secret partner – a person who takes part in management but who is not know to the public.
Any business may have the form of the partnership, for example, in such professional fields as medicine, law, accounting, insurance and stockbrokerage. Limited partnerships are a common form of ownership in real estate, oil prospecting, quarrying industries, etc.
Partnerships have more advantages than sole proprietorships if one needs a big capital or diversified management. Like sole proprietorships they are easy to form and often get tax benefits from the government.
Partnerships have certain disadvantages too. One is unlimited liability. It means that each partner is responsible for all debts and is legally responsible for the whole business. Another disadvantage is that partners may disagree with each other.
Comprehension questions.
1. what is the difference between a general partnership and a limited partnership?
2. is there any difference between a silent partner and a secret partner? What is this difference?
3. in what professional fields are the partnerships found?
4. in what businesses is the partnership a common form?
5. what are the advantages of a partnership?
6. discuss the disadvantages of a partnership. Would you prefer partnership or sole proprietorship for business? give your reasons.
partnership
to carry on a business
profit
general partner
limited partner
silent partner
secret partner
law
insurance
stockbrokerage
real estate
oil prospecting
quarrying industries
advantage
disadvantage
to be legally responsible
to be busy with
to go into business
to get along well
to attract customers
to make a right choice
background
accounting
to run a risk
to be liable
amount of money
to put an amount of money
into business
to combine resources
advantage
to contribute services, skills
to distribute profits and losses
to share
the subject becomes quite technical
deal
Exercise 2. (стр. 14)
1. what do you want to be busy with?
2. do you want to go into business alone or with a partner?
3. with what partner do you get along well?
4. imagine you run a stop. What will you do to attract customers?
5. do you need to consult a lawyer, to make a right choice when starting the business.
6. what is you background?
7. are you a careful person, or do you like to run a risk?
8. how can you combine the resources with your partner?
9. what services and skills can you contribute in your business?
10. how will you distribute profits and losses in your partnership?
11. what kind of partner would you like to be: a general partner or a limited partner? Why so?
Lesson 3.
Corporations.
A business corporation is an institution established for the purpose of making profit. It is operated by individuals. Their shares of ownership are represented by stock certificates. A person who owns a stock certificate is called a stock-holder.
There are several advantages of the corporate form of ownership. The first is the ability to attract financial resources. The next advantage is the corporation attracts a large amount of capital it can invest it in plants, equipment and research. And the third advantage is that a corporation can offer higher salaries and thus attract talented managers and specialists.
The privately owned business corporation is one type of corporation. There are some other types too. Educational, religious, charitable institutions can also incorporate. Usually such corporation does not issue stock and is nonprofit. If there is a profit it is reinvested in the institution rather than distributed to private stockholders.
In some western countries, cities, states, federal government and special agencies can establish governmental corporations. A few examples of these governmental corporations are state universities, state hospitals and city owned utilities. Governmental corporations are non-profit as a rule and usually they do not issue stock certificates.
Comprehension questions.
1. Who can own a corporation?
2. Is a corporation necessarily larger than a sole proprietorship?
3. What are the advantages of the corporate form of ownership?
4. What can you say about the disadvantages of the corporate form of ownership?
5. Do the corporations issue stock to stockholder?
6. What kind of corporations usually don’t issue the stock?
7. What world-known corporations do you know?
8. What types of business usually take the corporate form of ownership?
corporation
to establish
stock certificate
stockholder (shareholder)
to attract financial resources
to offer high salaries
to attract a large amount of capital
educational, religious, charitable institutions
to issue stock
nonprofit
to reinvest
bylaws
I need some legal advice
to incorporate
to invest
to expand
to follow a legal procedure
to apply for a corporate charter
to issue and sell stock in exchange for investment capital
stockholder, shareholder
to hold a meeting
to elect a board of directors
to choose the company’s officers
to have a final authority
to supervise daily management
to vote
annual meeting
to have limited liability
to own property
to sue
to be sued
Exercise 3. (стр. 22)
1. in what corporation would you invest money?
2. what legal procedure do you have to follow if you want to form a corporation?
3. who has final authority and supervises the daily management of a corporation?
4. who often do the stockholders choose the company officers?
5. the stockholders have unlimited liability, don’t they?
6. in what way can a corporation act?
7. what do you think about the possibilities of forming corporations in this country?
8. in what spheres of industry is a corporate form of proprietorship the most beneficial in this country?
Exercise 4. (стр. 22)
1. корпорация может выпускать и продавать акции.
2. корпорация может предлагать более высокую заработную плату.
3. корпорация имеет больше возможностей для вовлечения финансовых ресурсов, чем партнерство.
4. каждый год акционеры проводят собрание.
5. образовательные, благотворительные, религиозные учреждения могут быть корпорациями. Подобные учреждения, как правило, не приносят прибыль.
6. эта корпорация прибыльна, она будет расширяться.
7. сначала вы должны подать заявление на корпоративный патент.
8. акционеры имеют решающее слово в управлении корпорацией.
9. административные исполнители кампании осуществляют постоянное руководство.
10. корпорация имеет право возбуждать уголовное дело.