Title: ENTREPRENEURIAL AWARENESS: LEGAL FORMS OF BUSINESS
Course: INTRODUCTION TO ENTREPRENEURSHIP > Section: ENTREPRENEURIAL AWARENESS: LEGAL FORMS OF BUSINESS

9.1 Introduction

Welcome to the ninth lesson in legal forms of business class. We just completed the introductory sections of the entrepreneurship unit. By now, you understand property rights and can identify different forms of intellectual property. This lesson focuses on Legal forms of business and evaluation how one can form a business. In this lesson, we will identify Legal forms of business which entrepreneurs identify and you must decide on a legal structure for it.

9.2 Learning Outcomes

By the end of the lesson, you will be able to;

9.2.1        Identify three legal forms of business

9.2.2        Distinguish between the incorporated and corporated business forms

9.2.3        Develop documentation required in the three legal forms of business.

9.2.1. Main legal forms of business

A business can be organized in one of several ways, and the form its owners choose will affect the companies and owners' legal liability and income tax treatment. This lesion will illustrate how the various forms of ownership that an owner chooses, affects how that business is taxed, how profits are distributed, and what regulations are to be followed. Through careful study, as a potential owner, you will decide in which form you are the most comfortable operating. The form of ownership you choose will directly correspond to the growth, taxation, and future of your company.

E-tivity 9.2.1 Main legal forms of business

Numbering, pacing and sequencing | 9.2.1
Title | Legal forms of business
Purpose | The purpose of this e-tivity is to enable you to appreciate the various legal forms of business
Brief summary of overall task
Read Chapter 6 of the book “Forms of business ownership” (3^rd ed.) by Poatsy Martin from this link

https://slideplayer.com/slide/5814637/ by © 2014 Pearson Education, Inc.

Watch the following slide on legal forms of business on this link

https://www.slideshare.net/mmoore5/3-legal-forms-of-business

from @cengage Learning /South-Western

Watch the following YouTube on the legal forms of business

https://www.youtube.com/watch?v=g926iQeI0XY

After watching respond to the following questions

1. Using bullet points, identify 3 legal forms of business
2. In a tabular format, write the merits and demerits of sole proprietorship and partnerships
3. Using the information from a. above, give two examples of business of your choice explaining how it was formed.
Spark |
Individual task
1. Click on the link provided
2. Watch the video and slides
3. Read the book chapter
4. Give your answers in discussion forum 9.2.1
Interaction begins | 1            Post your answer in the discussion forum 9.2.1 2            Read posted work from 2 colleagues 3            Post at least one comment on their work and give constructive criticism
E-moderator interventions
1. Summarize the threads
2. Give feedback
3. Provide teaching points
4. Close the E-tivity
Schedule and time | This task will take two hours
Next | Distinguishing corporated from incorporated business forms

9.2.2 Corporated and incorporated business forms

An incorporated business (also called a corporation) is a type of business that offers many benefits over being a sole proprietor or partnership, including liability protection and additional tax deductions. Forming a corporation also allows you raise capital through sale of shares of your company.

E-tivity 9.2.2 Corporated and incorporated business forms

Numbering, pacing and sequencing | 9.2.2
Title | Corporated and incorporated business forms
Purpose | The purpose of this e-tivity is to enable you distinguish between corporated and incorporated business forms
Brief summary of overall task
Read chapter 30 of the book on this link  - The Legal Environment and Business Law: Master of Accountancy Edition (v. 1.0))

After reading, watch the following slide

https://www.slideshare.net/markklein57/incorporation-powerpoint

by Mark Klein and  answer the following questions;

Question 1.

1. In the form of a table, distinguish between corporated and incorporated forms of business.
2. In one sentence, state the main reason for incorporating businesses.
3. In one paragraph of not more than 150 words, explain the disadvantages of incorporation.

Question  2.

Go through this link  https://quickbooks.intuit.com/r/structuring/answers-to-frequently-asked-questions-about-incorporation/

 from © 2019 Intuit Inc

and answer the following questions.

1. In a brief paragraph, explain why you would want to incorporate a business.
2. Using bullet points, state the disadvantages of forming a Corporation

Print the assessment on corporated and incorporated forms of business and conduct a self-examination of a business formation of your choice
Spark | Go through these slides: https://study.com/academy/lesson/corporations-types-advantages-disadvantages-examples.html - © copyright 2003-2019 Study.com
Individual task
1. Click on the link provided
2. Watch the slides
3. Give your answers in discussion forum 9.2.2
4. Print the “assessment corporated and incorporated forms of business and conduct self-examination on business formation of your choice.
5. Post the scanned assignment in the discussion forum 9.2.2.
Interaction begins
1. Post your answer in the discussion forum 9.2.2
2. Read posted work from 2 colleagues
3. Post at least one comment on their work and give constructive criticism
E-moderator interventions
1. Summarize the threads
2. Give feedback
3. Provide teaching points
4. Close the E-tivity
Schedule and time | This task will take a minimum of two hours
Next | Documentation of legal forms of business

9.2.3 Development of Documentation of legal forms of business

After generating a incorporating a business it is important as an entrepreneur develop documentations required to proper. Documentation tells the story of a business; its origins, intent and the journey it’s taking to achieve its ambitions. These documents are regularly reviewed and updated to ensure they are fit for purpose and legally compliant. The document outlines in detail the rights and responsibilities of all parties to a business operation. They era enforceable by force of law and are designed to guide the partners in the conduct of the business. They are helpful in preventing disputes and disagreements in the business.

 E.tivity 9.2.3 Documentation of legal forms of business

Numbering, pacing and sequencing | 9.2.3
Title | Development of Documentation of legal forms of business
Purpose | The purpose of this e-tivity is to enable you to understand and Development Documentation for  legal forms of business
Brief summary of overall task
Watch the following slides on these links https://www.slideshare.net/Capitakenya/registration-of-business-names-in-kenya  - Published in Law

https://www.slideshare.net/Capitakenya/setting-up-a-business-in-kenya-41193261 - Published in Law

After reading, respond to the following questions;

1. Using bullet points, identify the key factors to consider when registering a business in your country.
2. In two sentences, explain what the certificate of incorporation is.
3. Using a chart, develop a document outlining the key steps for registering a private company in your country.
Spark | How are businesses formed in your country?
Individual task
1. Click on the link provided above
2. Watch the slides
3. Give your answers in discussion forum 9.2.3
4. Print the “assessment registering a business and conduct self-examination on business registration of your choice.
5. Post the scanned assignment in the discussion forum 9.2.3
Interaction begins
1. Post your answer in the discussion forum 9.2.3
2. Read posted work from 2 colleagues
3. Post at least one comment on their work and give constructive criticism
E-moderator interventions
1. Summarize the threads
2. Give feedback
3. Provide teaching points
4. Close the E-tivity
Schedule and time | This task will take two hours
Next | Lesson 10: Business plan

Cluster

Assessment Questions

Question 1

Which of the following is NOT an example of a business organization?

- A sole trader
- An employee
- A limited company
- A limited liability partnership

Question 2

Which of the following are types of partners:

                             i.            A 'typical' partner under the Partnership Act 1890.

                           ii.            A silent partner.

                         iii.            A salaried partner.

                         iv.            A partner by estoppel.

- All of the above.
- i only
- ii, iii and iv
- ii and iii

Question 3

Which of the following is NOT a duty imposed on partners?

- Disclosure of full information
- To account for benefits received
- Good faith
- Fidelity (where the partner enters a partnership in another, unrelated, industry).

Question 4

Which is NOT a basic type of business ownership?

- Proprietorship
- Partnership
- Corporation
- Retail

Question 5

If you want to be your own boss, make your own decisions, and keep all of the profits to yourself; you want to form a ____________________________________________.

- Sole Proprietorship
Feedback: Correct

Question 6

Being incorporated provides limited liability for its owners

- True
Feedback: You are Correct
- False
Feedback: You are wrong

Question 7

When a corporate owner dies, the corporation ceases to exit

- False
Feedback: You are Correct
- True
Feedback: You are wrong

Question 8

What is the main disadvantage of being a sole proprietor?

- High startup costs
- Limited skills
- Unlimited liability
- Limited liability

Question 9

What type of business consists of two or more people?

- Sole Proprietorship
- Partnership
- Corporation
- Franchise

Question 10

In which type of organization does one person take all the risks?

- Corporation
- Partnership
- Monopoly
- Sole proprietorship

9.4 References

1. Forms of Business Ownership - ppt download. (n.d.). Retrieved from https://slideplayer.com/slide/5814637/
2. Mmoore5 Follow. (2011, July 28). 3 Legal Forms of Business. Retrieved from https://www.slideshare.net/mmoore5/3-legal-forms-of-business
3. Academy, S. (2012, June 26). Saylor.org BUS205: "Forms of Business Ownership". Retrieved from https://www.youtube.com/watch?v=g926iQeI0XY
4. Beck, D. (2009, February 20). Protection. Retrieved from https://www.slideshare.net/samuraitheologian/maslows-hierarchy-of-needs-theory-online/13-protection
5. The Legal Environment and Business Law: Master of Accountancy Edition. (n.d.). Retrieved from https://2012books.lardbucket.org/books/the-legal-environment-and-business-law-master-of-accountancy-edition/index.html
6. (n.d.). Retrieved from https://www.google.com/search?q=slides corporated and incorporated
7. QuickBooks. (2016, November 03). Answers to Frequently Asked Questions About Incorporation. Retrieved from https://quickbooks.intuit.com/r/structuring/answers-to-frequently-asked-questions-about-incorporation/
8. (n.d.). Retrieved from https://study.com/academy/lesson/corporations-types-advantages-disadvantages-examples.html
9. Capitakenya Follow. (2014, November 06). Setting up a Business in Kenya. Retrieved from https://www.slideshare.net/Capitakenya/setting-up-a-business-in-kenya-41193261
10. (n.d.). Retrieved from https://www.google.com/search?q=company formation in kenya &biw=1366&bih=654

Event: ENTREPRENEURIAL AWARENESS: LEGAL FORMS OF BUSINESS (Lesson opens)