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This is the VOA Learning English Economics Report. |
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Businesses are structured in different ways |
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to meet different needs. |
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The simplest form of business |
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is called an individual or sole proprietorship. |
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The proprietor owns all of the property of the business |
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and is responsible for everything. |
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For legal purposes, with this kind of business, |
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the owner and the company are the same. |
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This means the proprietor |
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gets to keep all of the profits of the business, |
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but must also pay any debts. |
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Another kind of business is the partnership. |
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Two or more people go into business together. |
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An agreement is usually needed to decide |
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how much of the partnership each person controls. |
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One kind of partnership is called a limited liability partnership. |
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These have full partners and limited partners. |
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Limited partners may not share as much in the profits, |
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but they also have less responsibility for the business. |
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Doctors, lawyers and accountants often form partnerships |
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to share their risks and profits. |
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A husband and wife can form a business partnership together. |
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Partnerships exist only for as long as the owners remain alive. |
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The same is true of individual proprietorships. |
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But corporations are designed to have an unlimited lifetime. |
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A corporation is the most complex kind of business organization. |
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Corporations can sell stock as a way to raise money. |
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Stock represents shares of ownership in a company. |
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Investors who buy stock can trade their shares |
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or keep them as long as the company is in business. |
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A company might use some of its earnings |
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to pay dividends as a reward to shareholders. |
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Or the company might reinvest the money back into the business. |
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If shares lose value, |
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investors can lose all of the money they paid for their stock. |
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But shareholders are not responsible for the debts of the corporation. |
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A corporation is recognized as an entity |
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-- its own legal being, separate from its owners. |
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A board of directors controls corporate policies. |
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The directors appoint top company officers. |
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The directors might or might not hold shares in the corporation. |
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Corporations can have a few major shareholders. |
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Or ownership can be spread among the general public. |
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But not all corporations are traditional businesses |
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that sell stock. |
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Some nonprofit groups are also organized as corporations. |
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And that's the VOA Learning English Economics Report, |
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written by Mario Ritter. |
