Entrepreneurship - Ch 3 Types of Business & Business Ownership
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26 terms
Terms | Definitions |
|---|---|
 manufacturing business (manufacturer) | converts materials into goods suitable for use and then sells those goods to others. |
| wholesaling business (wholesaler) | buys goods in large quantities, typically from manufacturers, and resells them in smaller batches to retailers. |
| retailing business (retailer) | buys goods, often from wholesalers, and resells them directly to consumers, who are the end buyers. |
| reseller's permit | Special permit, required by most states, that retailers must have to purchase goods tax-free from wholesalers and collect sales tax from end buyers. |
| trade business | a business that is either a wholesale or retail business. |
| service business | a business that provides a service for a fee. |
| franchise | is an arrangement in which an established company sells the right for others to use the company's name and operating plan to sell products or services. |
| North American Industry Classification System | a detailed numbering system developed by the United States, Canada, and Mexico to classify North American business establishments by their main production processes |
| liability | legal obligation of a business owner to use personal money and possessions to pay the debts of the business. |
| unlimited liability | a business owner can be legally forced to use personal money and possessions to pay the debts of the business. |
| limited liability | a business owner cannot be legally forced to use personal money and possessions to pay business debt. |
| sole proprietorship | legally defined type if business ownership in which a single individual owns the business, collects all profit from it, and has unlimited liability for its debt. |
| partnership | legally defined type of business organization in which at least two individuals share the management, profit, and liability. |
| general partnership | all partners have unlimited liability. |
| limited partnership | is structured so at least one partner (the general partner) has limited liability for the debts of the business. |
| partnership agreement | legal document that clearly defines how the work, responsibilities, rewards and liabilities of a partnership will be shared by all partners. |
| corporation | is a legally defined type of business ownership in which the business itself is considered a type of "person"(often referred to as an "entity") under the law, and limited liability is granted to business owner(s). |
| shareholders (stockholders) | owners of a corporation. |
| share of stock | is a unit of ownership in a corporation. |
| dividend | a portion of the corporations profit. |
| C corporation | corporation that is taxed as an entity by the federal government. |
| incorporate | to set up a corporation in accordance with the laws of the particular state where the business is located. |
| subchapter S corporation | a corporation not taxed as an entity, it's income or loss is applied to each shareholder and appears on their tax return. |
| limited liability company | legally defined type of business ownership similar to corporation but with similar operating requirements and tax procedures, and greater liability protection for the business owners. |
| nonprofit organization | is a legally defined type of business ownership in which a company operates not to provide profit for its shareholders but to serve the good of society. |
| cooperative | is a business owned, controlled, and operated for the mutual benefit of its members. |
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