Business Structures and Management Fundamentals

Business Ownership and Legal Structures

Partnership: A business owned and operated by two or more persons as a voluntary legal association.

• Limited Liability Partnership (LLP): The partnership limits the risk of loss of personal assets. The liability of each partner—and the risk of losing personal assets—is limited to just his or her own acts and omissions and those of his or her directly reporting employees.

Corporate Entities

C Corporation: A state-chartered entity that pays taxes and is legally distinct from its owners. This structure is favored by big businesses.

S Corporation: A corporation with no more than 100 owners (shareholders). Like a partnership, the owners are taxed only at the personal level, rather than the corporate level.

Limited Liability Company (LLC)

Limited Liability Company: This structure combines the tax benefits of a sole proprietorship or partnership (one level of tax) with the limited liability of a corporation. An extra benefit is that you are free of certain legal requirements, including annual reports, director meetings, and shareholder requirements.

Entrepreneurship and Innovation

Micro-preneurs: These are individuals who take the risk of starting and managing a business that remains small. This path allows them to do the kind of work they want to do and offers them a balanced lifestyle.

Enterprise: An endeavor in which the primary motive is to make a profit.

Intrapreneur: Someone who works inside an existing organization who sees an opportunity for a product or service and mobilizes the organization's resources to try to realize it.

Skunkworks: A team whose members are separated from the normal operation of an organization and asked to produce a new, innovative project.

Corporate Growth and Public Offerings

The expression "going public" means that a privately owned company becomes a publicly owned company by issuing stock for sale to the public. It might be done for a small company that has attained a substantial measure of success. Indeed, public stock offerings are usually the means by which angel investors and venture capitalists hope their investment will result in a benefit for them.

Management Principles and Organizational Levels

Management: The pursuit of organizational goals effectively and efficiently through planning, organizing, leading, and controlling.

Organizing: Arranging tasks, people, and other resources to accomplish the work.

The Control Process

• Establish standards, monitor performance, compare performance against standards, and take corrective action if needed.

Three Levels of Management

1. Top Managers: They make long-term decisions about the overall direction of the organization and establish the objectives, strategies, and policies.
2. Middle Managers: They implement the policies and plans of the top managers above them and supervise and coordinate the activities of the supervisory managers below them.

Financial and Legal Definitions

Foreign Corporation: A term used in the United States for an existing corporation that is registered to do business in a state or jurisdiction other than where it was originally incorporated.

Profit Formula: The formula for profit is total revenue minus total expenses, resulting in net profit, according to Accounting Tools.