agbus

• Types of agribusinesses


  • Single (sole) proprietorship
  • Partnership
  • Corporation
• 3 types of corporations

  • Subchapter C
  • Subchapter S
  • Subchapter T
• Sole proprietorship


  Organization that is owned by one person, most common form of business ownership
• Partnership


  Two or more people make a legal agreement to become co-owners of business
• Corporation


  A legal entity with authority to act that has liability separate from that of its owners
• Sole proprietorship


  • Simplest type of business, easiest to organize, owner is in complete control
• Types of partnerships


  • General partnership
  • Limited partnership
  • Limited liability partnership
• General partnership


  Formalized agreement between 2 people specifying resources contributed by each partner, who has decision-making authority, how profits will be divided
• Limited partnership


  Partners not completely liable for each others' debt, person invests in partnership but does not participate in daily business management
• Limited liability partnership


  Partners can protect their existing personal assets, partners not responsible for the business's debts beyond the amount of their investment
• Wise for each partner to get the advice of a lawyer when preparing a written partnership agreement
• Corporation


  Legal entity separate from the people who own it, can own property, pay taxes, make contracts, sue, etc., issues stock where new owners are called stockholders
• Types of corporations


  • Subchapter C
  • Subchapter S
  • Subchapter T
• Subchapter C corporation


  Sells stock to investors, profit-making, board of directors may pay dividends to stockholders
• Subchapter S corporation


  Primarily for small businesses, profit-making, taxed like sole proprietorship, certain qualification requirements
• Subchapter T corporation


  Very popular in agricultural industry, non-profit
• Establishing a corporation


  Articles of incorporation filed with the secretary of state's office including the name of the corporation, names of the people who incorporated it, purposes of the corporation, duration of the corporation, number of shares that can be issued, voting rights attached to each type of stock, other rights of the shareholders, minimum capital of the corporation, address of the corporate office, name and address of the person responsible for legal service, names and addresses of the first directors
• Bylaws


  Corporations have bylaws in addition to articles of incorporation, describe how the firm is to be operated, from both legal and managerial points of view
• Limited Liability Company (LLC)


  Legal entity that exists separate from its owners, combines the corporate advantage of limited liability with the partnership advantage of single taxation
• Cooperative


  Corporation formed to provide goods and services to members either at cost or as near to cost as possible, not formed to make profits, serve the people who own shares in the organization
• Types of cooperatives


  • Supply
  • Marketing
  • Service
• Supply cooperative


  Buy supplies in quantity for resale to members, members save money because items are bought in bulk, can manufacture items rather than buying them to sell
• Marketing cooperative


  Find buyers who will pay the highest price for agricultural products
• Service cooperative


  Provide members with specific service rather than a product, members probably could not afford services individually
• Cooperative membership


  Some co-ops serve the general public, others serve members only, major emphasis always on members, voting stock and investment stock are separate, only common (voting) stock gives a person the right to vote on business matters, preferred (investment) stock only gives a person the opportunity to invest in the business and receive a reasonable return on investment
• Cooperative control


  Most cooperatives use a democratic system of control, each member has one vote only, no additional votes for owning extra stock, critics often contend that co-ops are run by a few "elite" members only because many members fail to exercise their right to vote during the annual stockholders' meetings
• Cooperatives


  • Service at cost, any excess earnings are returned to patrons in the form of patronage dividends, democratic control (one member, one vote), limited returns on investment
• Franchise


  Contract in which a franchisor sells to another business the right to use its name and sell its products, franchisee (person purchasing the franchise) buys a system of operation that has proven successful