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Forms of business ownership in the u.S.A.

The three most common forms of business ownership are sole proprietorship, partnership and corporation.

Sole proprietorships are the most common type of business in the USA, accounting for almost 70% of all enterprises. However, corporations account for over 75% of the profits earned by American business.

Each form of ownership has a characteristic internal structure, legal status, size and field to which it is best situated. Each has key advantages.

A sole proprietorship is a business owned by just one person, although it may have many employees. It is the easiest form of business to start with limited funds. Most forms retail establishments and small service businesses are sole proprietorships, as are many part-time businesses run from the home. The profits in this business make up more than $51mln that makes up 25% of all business profits, while partnerships yield losses about $7mln yearly.

A partnership is a legal association of two or more persons as co-owners of an unincorporated business. The partners share the profits and losses of the business and often share management responsibilities as well. In a general partnership all partners are legally equal and are liable for the business debts. In a limited partnership, however, one or more people act as general partners and run the business; the remaining partners are passive investors whose liability is limited to the amount of their capital contribution. A partnership can give the members some of the freedom and flexibility of a sole proprietorship. As a rule top-quality employees form a partnership in fields such as accounting, law and finance.

Corporation is a legally chartered enterprise with most of the legal rights of a person, including the right to conduct a business, to own and sell property, to borrow money and to sue or be sued.

A corporation has five important characteristics:

  1. It is an artificial person with specific legal standing.

  2. It has an unlimited life span.

  3. It is empowered by the state to carry on a specific line of business.

  4. It is owned by shareholders.

  5. Its shareholders are liable for damages only to the extent of their holdings.

COMPREHENSION CHECK

Exercise 1. Read the text and complete the following chart.

Forms of ownership

Number of owners

Profits

in the business

Types of enterprises engaged in the business

Exercise 2. Work in pairs. Read and discuss advantages and disadvantages of business ownership.

Advantages and disadvantages of the three forms of business ownership.

FORM OF OWNERSHIP

ADVANTAGES

DISADVANTAGES

Sole

Proprietorship

Ease of formulation and dissolution.

Control and freedom.

Secrecy of operation.

Unique tax advantages.

Limited potential for big profits.

Restricted financial resources.

Reliance on owner for all managerial skills.

Unlimited liability.

Life of business limited to owner’s interest or life span.

Partnership

Ease of formulation.

Ownership opportunities for skilled persons.

Legal standing in case of disputes.

Increased capital and credit sources.

Ability to continue despite

changes in ownership.

Unlimited liability of general partners.

Ever-present danger of interpersonal conflict between partners.

Potential for aggressive competition among employees for partnership status.

Lack of clear-cut management responsibility.

Corporation

Limited liability for shareholders (owners).

Investment liquidity.

Unlimited lifespan.

Requirements for public

disclosure.

Costs to establish and dissolve tax rates.

Exercise 3. Write a composition (about 200-250 words) about one of the forms of business ownership you’d like to organize. Use the following words and expressions in your work.

    • I’d prefer … because

    • I have no doubt …

    • To some extent I can agree with …

    • In my opinion …

    • To put that another way …

    • I’m afraid I can’t agree with …

    • It might be worth doing something …

    • I would suggest …

    • I tend to disagree …

    • Maybe that’s true, but …

GRAMMAR

Active Voice. Future Tenses:

Simple, Continuous, Perfect,

Perfect Continuous.

Future Tenses

Shall

Future Simple

+ V

Will

  • Future action

They will organize a partnership next month.

  • Promise

Don’t worry, I’ll give you the job!

  • Hope

All our family hope they’ll get the job they

have applied for!

Shall

Future Continuous

be + Present Participle (V ing)

Will

  • Future action in progress

After signing a contract he will be working for “Primetime” for the next five years.

Shall

Future Perfect

have + Past Participle

Will

Shall

Future Perfect Continuous

have been + Present Participle (V ing)

Will

  • Both tenses express future action which will be completed by a certain time in future but Future Perfect Continuous stresses the process.

All accountants will have finished their annual reports by the 1st of February.

She will have been working for FoxMart for 7 years by this time next week.

Task 1.

Read the text; define in what way do all business forms differ from each other? Also be ready to give definitions to the following notions: structure, supervise, responsible, accountable, authority, the chain of command, delegation of authority.

Text 2.