Business_Organization

A shoe company that has decided to sell shares of the company to investors and the owners has decided to keep shares to receive a percentage of the company profits. The investors would then be responsible for any debt occurred by the company and have creditors seeking repayment from investors making this a joint-stock business model. Joint-stock business models are unlimited liability, meaning investors wealth is at risk if the company were to default on any debt (Jones, 2007). A bicycle company has decided to become a limited liability business and sell shares to investors. Although the investors have a stake in the company, investors are not liable for any debt defaulted by the bicycle company. Limited liability businesses are created to minimize the investors risk associated with investing in a company. Investors carry the risk of losing all funds invested in the company if the company were to default or go out of business. The limited liability prevents creditors from being able to take all of the investor’s wealth because of a company’s default and can only access the initial investment (Jones, 2007). The business model of partnership is formed by two or more people combine skills and capital to start a business (Jones, 2007). Two people whom start an auto repair facility by contributing skills and capital have become owners in a partnership. The partners will agree upon how the company profits are to be divided between the owners, usually by what the partners has invested compared to other partners. All partners of the repair facility will be responsible for the financials of the business. Many small businesses start out as sole proprietorships that are owned by one person (Jones, 2007). The owner of the liquor store will be responsible for all the company’s liabilities and will be responsible for all the risk associated with the business. The owner’s personal wealth and property is at risk if the business were to default, along with business revenues being reported on the owner’s tax returns (Jones, 2007). Reference Jones, (2007). Introduction To Business: How Companies Create Value for People. : The McGraw−Hill Companies.