HOW TO FORM A BUSINESS

GROUP 5:

1. Dewi Putri Siagian – 213403040009

2. Febby Valentina - 213403050005

3. Joni Purba – 213403040002

4. Wahyu Subroto – 213404040001

5. Wulan Cahya Ningsih - 203405040007

Supporting Lecturer : Drs. Bolean Silalahi, M. M

UNIVERSITAS MPU TANTULAR

Tahun ajaran 2021/2022

 Table of Contents

I. Sole Proprietorships
 Definitionsole Proprietorships
 Advantages And Disadvantages Of Sole Proprietorships
II. Partnership
 Definition General Partnership
 Definition Limited Partnership
 Definition Master Limited Partnership
 Advantages And Disadvantages Of Partnerships
III. Corporations
 Definition Corporations
 Advantages And Disadvantages Of Corporations
 Definition S Corporations
 Definition Limited Liability Companies
IV. Mergers And Acquisitions
 Difference Between Merger And Acquisition
 Types Of Mergers
 Leverage Buyouts Role
V. Franchises
 Definition Franchises
 Advantages And Disadvantages Of Franchises
VI. Cooperatives
 Definition Cooperatives
 Explain The Role Of Cooperatives
SOLE PROPRIETORSHIPS

Definiton Sole Proprietorship

A business that is owned and usually managed by one person.

Advantages Of Sole Proprietorships :

1. Ease of starting and ending the business. All you have to do to start a sole proprietorship
is buy or lease the needed equipment and put up some announcements saying you are in
business. You may have to get a permit or license form the local government, but often
that is no problem. It is just as easy to get out of business; you simply stop

2. Being your own boss. Working for someone else doesn't have the same joy as working
for yourself-at least, that's how the sole proprietor feels.

3. Pride of ownership. People who own and manage their own business deserve to be proud
of their work

4. Leaving a legacy. Owners can leave a running business for future generations.

5. Retention of company profits. Owners not only keep the profits earned but also benefit
from the increase in value as the business grows.

6. No special taxes. All profits from a sole proprietorship are taxed as the owner's personal
income, and the owner pays normal income tax on that money.

Disadvantages Of Sole Proprietorships :

1. Unlimited liability the risk of personal losses. When you work for someone else, the
problem if the business is not profitable that the business takes out is your debt and you
have to pay for it

2. Limited financial resources. Funds available to a business are limited to what one owner
can raise.
 3. Management difficulties. All businesses need management; one must keep inventory,
accounting and tax records.

4. Limited life span. If the sole proprietor dies, is incapacitated, or retires, there is (unless
sold or taken by the sole proprietor's heirs

5. Overwhelming time commitment. Even though sole proprietors say they set their own
hours, it's hard to own a business, manage it, train people, and have time for other things
in life when no one is sharing the burden.

6. Few fringe benefits. If you are your own boss, you are missing out on the perks that often
come with working for you. etc. You have no paid health insurance, no paid disability
insurance, no retirement plan, no sick leave, and no vacation pay.

7. Limited growth. Expansion is often slow because sole proprietorships rely on their
owners for most of their creativity, business knowledge, and funding.

PARTNERSHIP
A. General Partnerships , all owners share in operating the business and in assume ability for
the bussines debts.
B. Limited Partnerships. A limited Partnership has one or more general Partners and one or
more limited partners
C. Master limited Partnership. Looks much like a corporation in that it acts like a
corporation and is traded on the stock exchanges like a corporation, but is taxed like
partnership and thus avoids the corporate income tax.
Advantages Of Partnerships :
1. More financial resources.
When two or more people pool their money and credit,it is a reni, utilities, and other bills
incurred by a business..
2. Shared management and pooled/complementary skills and knowledge.
 It is simply much easier to manage the day-to-day activities of business with carefully
choosen partners.Partners give each other free time from the business and provide
different skills and prespectives.
3. Longer survival.
One study that examined 2000 business started since 1960 found the partnerships were
four times more likely to succeed than sole proprietorships.
4. No special taxes.
As with sole proprietorships, all profits of partnerships are taxed as the personal income
of the owners, who pay the normal income tax on the money

Disadvantages Of Partnership

1. Unlimited liability
Each general partner is liable for the debts of the firm, no matter who was responsible for
causing them.
2. Division of profits
Sharing risk means sharing profits and that can cause conflict. There is no set system for
dividing profits in a partnership and they are not always divided evenly.
3. Disagreements among partners
Disagreements over money are just one example of potential conflict in a partnership.
4. Difficulty of termination
once you have committed yourself to a partnership, it is not easy to get out of it. Sure you
can just quit

CORPORATIONS
Definition Corporations
The corporation or company here is an association or organization which by law is treated like a
human being, namely as the bearer (or owner) of the rights and obligations to have the right to
sue or be sued in court.

C Corporation
Conventional (C) corporations are state-owned legal entities that are authorized to act and have
separate obligations from their owners-shareholders. Shareholders are not responsible for the
debts or other problems of the corporation beyond the money they invested in it by investing
ownership of shares, or shares, in the company.

Advantages of Corporations

Let's explore some of the advantages of Corporations:

1. Limited liability
Remember limited liability means that the owners of business are responsible for its
losses only up to the amount they invest in it
2. Ability to raise more money for investment
To raise money, a corporation can sell shares of its stock to anyone who is in the
interested
3. Size
Size summarizes many of the advantages of some conporations. because they can raise
large amounts of money to work with
4. Perpetual Life
Because corporations are separate from those who own them the death of one or more
owners does not terminate the corporation.
5. Ease of ownership change
It is easy to change the owners of a corporations. all that is necessary is to sell the stock
to someone else.
6. Ease of attracting talented employees
Corporations can attract skilled employees by offering such benefits as stock option.
7. Separation of ownership from management.
Corporations are able to raise money from many different owners/stockholders without
getting them involved in managements

Disadvantages of Corporations

The following are a few of the disadvantages

 1. Initial cost.
Incorporation may cost thousand of dollars and require expensive lawyers and
accountants.
2. Extensive paperwork.
3. Double taxation.
Corporate income is taxed twice. First the corporation pays tax on its income before as
dividen, to stockholders.Then the stockholders pay incom tax on dividens they receive
4. Two task returns
An individual who incorporates must file both a corporate tax reurn and a individual tax
return. depending on the size of the corporation
5. Size
Size can be disadvantages as wel. large corporations sometimes become too inflexible
any and ties down in red tape to respond quickly to market changes, and their profitability
can suffer
6. Difficulty of termination
Once a corporation has started, it's relatively hard to end.
7. Possible conflict with stockholders and board of directors
S . Corporation

An S corporation is a unique government creation that looks like a corporation but is taxed like
sole proprietorshios and partnerships. S corporations have shareholders, directors, and
employees, and the benefit of limited liability, but their profits are taxed only as the personal
income of the shareholders-thusavoiding the double taxation of C corporations.
Limited Liability Companies

Limited Liability Company is a legal entity established based on an agreement, conducting

business activities with authorized capital which is entirely divided into shares and fulfills the
requirements stipulated in the Act.
MERGERS AND ACQUISITIONS

Difference Between Merger And Acquisition?

A merger is the result of two companies merging to form one company. It is similar to marriage,
joining two individuals as one family. An acquisition is the purchase of one company's property
and the liabilities of another. It's more like buying a house than entering a marriage.

3 MAJOR TYPES OF MARGERS

A. Vertical Merge : Company that share some product lines and market
B. Horizontal Merge : Have company / supplier or company/customer relationship
 C. Merger Conglomerate : Companies that have no direct common business areas merge to
obtain diversivication

LEVERAGE BUYOUTS ROLE (Peran Leverage Buyouts)

Taking a Firm Private (Mengambil Perusahaan Pribadi)

A Leveraged Buyout (LBO) is one company's acquisition of another company using a significant
amount of borrowed money to meet the costs of the acquisition. The assets of the company being
acquires are often used as collateral for the loans, along with the assets of the acquiring
company.

The aim of leveraged buyouts is to enable companies in making large acquisitions without the
need for a lot of capital.

Buy a Company > Fix it > Sell it

FRANCHISES
A franchise agreement is an arrangement whereby someone with a good idea for a busi- ness (the
franchisor) sells the rights to use the business name and sell a product or service (the franchise)
to others (the franchisees) in a given territory.
The most popular businesses for fran- chising are restaurants (fast food and full service) and gas
stations with conve- nience stores

Advantages of Franhises

1. Management and marketing assistance

2. Personal ownership
3. Nationally recognized name
4. Financial advice and assistance
5. Lower failure rate
Disadvantages of Franchises
1. Large start-up costs
2. Shared profit
 3. Management regulation
4. Coattail effects
what happens to your franchise if fellow franchisees fail? Due to this coattail effect, you
could be forced out of business even if your particular franchise has been profitable
5. Restrictions on selling
6. Fraudulent franchisors

COOPERATIVES

What is cooperative?

A business owned and controlled by the people who use it-producers, consumers, or workers
with similar needs who pool their resources for mutual gain. Small business often from
cooperative to gain more purchasing, marketing, or product development strength.

Cooperative Role

1. Can Reduce Unemployment Rate

2. Can Develop Community Business Activities
3. Can Play a Role in Improving People's Education, Especially Cooperative Education and
the Business World..
4. Can Act as a Tool for Economic Struggle