2005-2-10
I'm Gwen Outen with the VOA Special English Economics Report.
Businesses are structured in different ways to meet different
needs.
The simplest form of business is called an individual
proprietorship. The proprietor owns all the property of the business
and is responsible for it. This means the proprietor receives all
profits -- but also must pay any debts. The law recognizes no
difference between the owner and the business.
Another kind of business is the partnership. Two or more people
go into business together. An agreement is usually needed to state
how much of the partnership each person controls.
There are limited liability partnerships. These have full
partners and limited partners. Limited partners may not share as
much in the profits. But their responsibilities are also limited.
In the United States, the federal government does not tax
partnerships. The partners are taxed, though, on the payments they
receive.
Doctors, lawyers and accountants often form partnerships to share
the profits and risks of doing business. A husband and wife can form
a business partnership.
Partnerships can end at any time. But partnerships and individual
proprietorships exist only as long as the owners are alive.
The most complex kind of business organization is the
corporation. Corporations are designed to have an unlimited
lifetime.
Stock is a share of ownership in a corporation. Investors who buy
stock can trade their shares or keep them as long as the company is
in business. A company may pay shareholders in the form of what are
called dividends. Or the company may reinvest its earnings into the
business.
If shares lose value, investors can lose all the money they paid
for their stock. But shareholders are not responsible for the debts
of the corporation. A corporation is recognized as its own legal
being, separate from its owners.
A board of directors controls corporate policies. The directors
appoint top company officers. The directors might or might not hold
shares in the corporation.
Corporations may have a few major shareholders. Or ownership may
be spread among the general public. Incorporating offers businesses
a way to gain the investments they need to grow.
But not all corporations are traditional businesses that sell
stock. The American Red Cross is an example of a non-profit
corporation.
This VOA Special English Economics Report was written by Mario
Ritter. I'm Gwen Outen.