II. Read the text to fulfil the tasks
I. Pre-reading task
Unit 9.1. Launching a business
Before you read the text, look at the title. What do you expect the text to be about?
1. Owning a business: for and against.There are numerous reasons people think about owning a business of their own. Personal independence, unlimited profit potential, the opportunity to work at something that they love and at hours they choose are some of the reasons people have given for trying entrepreneur ship.
Unfortunately, the record shows that two out of three new businesses fail within their first four years. The problems that face small business are taxes, slow sales, the high cost of borrowing money and competition from other businesses. On the bright side, the innovativeness of entrepreneurs in small businesses enables a small business to react quickly and successfully to changing times.
Small business produces twice as many innovations per employee as larger firms. Those innovations are the source of new jobs and new opportunities for entrepreneurs. Large and small businesses organize in different ways to meet their objectives.
There are a lot of kinds of business organizations. We are going to describe the main of them.
2. A sole proprietorshipis a business owned by one person. Sole proprietorships are the most numerous kind of business organization because they are the easiest and least costly to organize. There are other advantages. Sole proprietors own all the profits of their enterprises, they have minimal legal restrictions and don't pay the special taxes placed on corporations. Sole proprietors also have the opportunity to achieve success and recognition through their individual efforts. But there are also some disadvantages. A very serious one is the unlimited liability that each proprietor faces. All debts and all problems associated with the business belong to the owner. If a business fails, the owner must personally assume the debts. This could mean the loss of personal property such as cars, homes and savings. A second disadvantage is that the sole proprietorship has limited capital. Also, when the owner dies, the business dies.
3. A partnershipis a business organization that is owned by two or more persons. Partnership offers certain advantages over sole proprietorship:
- Partners bring additional funds to a proprietorship, and fresh ideas
and talents to business organizations.
- Partnership is relativity easy to form and is not subject to special
taxation.
Partnerships have the following disadvantages:
- In many cases, each of the partners is subjected to unlimited liability.
- Anytime a partner dies or withdraws from the business, the
partnership is legally terminated. If the business is to continue, a new
partnership agreement must be drawn up.
- The amount of capital that a partnership can raise is limited.
- Partnership may disagree, causing management conflicts that could
threaten the firm's existence.
4. Corporationis a business organization created under a government charter. Ownership of a corporation is represented by shares of stock and for that reason corporate owners are known as stockholders. Corporations are so important because of the following advantages:
- Limited liability.
- Ease of transfer. Stock holders can enter or leave a corporation by
buying or selling shares of stock in that corporation.
- Unlimited life. When the corporate stock holders die, their shares of
stock are passed on to their heirs.
- Tax advantages. In certain instances individuals can reduce their tax
liability by incorporating.
The disadvantages are:
- It is difficult and expressive to organize a corporation.
- Corporation is a subject to special taxes.
- Corporation whose stock shares are sold to the public gives up its
right to privacy.
Not all business organizations fall into the categories that we have described. Other types of business organization are listed below:
The S corporation - the corporation for small business; government owned corporations, cooperatives, franchises, joint-stock companies, cartels, etc.
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