BG - Business and Government Overview

Entrepreneurship_OverviewTop.png

Business and Government

 

Key Terms

Articles of Incorporation – a state license for a corporation.

Board of Directors – a group of people elected by shareholders to manage a corporation and its executives.

C-Corporation – most common form of corporation where the entrepreneur is protected from lawsuits for the acts of the corporation.

Capital – the machinery, tools and buildings that are used to produce goods and services.

Circular Flow Model – a model of how products, resources and money flows in a market economy. The model includes households, businesses and the government.

Common Stock – shares of a corporation that can be purchased. Common stockholders have voting rights.

Corporation – a company that acts as a single entity (legally a person). The owners are not liable for the debts of the business.

Entrepreneurship – the ideas and initiative that people take to use the other resources to make goods and services for people.

Factors of Production – things that are used to produce goods and services and allow the economy to survive. Includes LAND, LABOR, CAPITAL and ENTREPRENEURSHIP.

Federal EIN – the Federal Employer Identification Number is given to businesses to identify the businesses and the employees that work for the business. This is used to track taxes for employees.

General Partnership – partners own a business together and they share in all assets, profits and liabilities.

Incentives – tax breaks, subsidies, credits and other items given to businesses to encourage them to open their business in a particular area.

Labor – all of the human resources in an economy.

Land – all of the natural resources in an economy.

Liability – being responsible for something (like the debts of a business).

Limited Liability Company (LLC) – tax advantages of a partnership, limited liability of a corporation, run like a sole proprietorship.

Limited Liability Partnership – partners are not responsible for other partner(s) misconduct or negligence.

Limited Partnership – a partnership where two or more people own a business, but one partner manages the business and is responsible and liable for the business activities and the other partner(s) do not participate in the management of the business and are limited in their liability.

Monopolistic Competition – there is a large number of businesses competing with similar products. It is easy to enter the market. Companies can differentiate their brands.

Monopoly – a market structure where one business controls the market. It is almost impossible for others to enter the market and the one business has total control over price and product offerings. In the U.S. most monopolies are illegal.

Nonprofit corporation – a corporation that makes money for other reasons than the owner’s profit. All profits must stay inside the corporation.

Oligopoly – a market structure where 3-5 companies dominate the market. The businesses sell the same or differentiated products. It is difficult for others to enter the market. Prices are often set artificially high and with collaboration of the businesses.

Partnership – a formal arrangement for two or more people to go into business together.

Partnership Agreement – a legal document that establishes the responsibilities of the partners and the profit sharing of the business’ profits

Perfect Competition – a large number of businesses compete with the same products. Easy to enter and exit. Very rare market structure.

Preferred stock – shares of a corporation; preferred stockholders have the right to get their investment back first.

Sole Proprietorship - business owned by one person and is the simplest business form. The owner is responsible for all its debts.

Subchapter S Corporation – taxed like a sole proprietor, but protects the owners from liability.

Unlimited liability – a business owner is personally responsible for all of the debts of the business.

Zoning laws – local laws that limit where businesses can locate and what can be done in certain areas.

Module Lessons Preview

In this module, we will study the following topics:

  • Forms of Business Ownership
  • Market Structures
  • Households, Businesses, and Government in the Economy
  • Identifying Location, Laws, and Cost

ENTREPRENEURSHIP_OverviewBottom.pngIMAGES CREATED BY GAVS