Types of proprietorship

I. Read and learn the following words and phrases:

business – владеть

owner – владелец

to consider – считать

to rent – арендовать

to market – продавать

to advertise – рекламировать

insurance – страхование

point of view – точка зрения

partnership – партнерство

corporation – корпорация

responsible – ответственный

debts and losses – долги и убытки

to provide – обеспечивать

to obtain – получить

to require – требовать

advantages – преимущества

disadvantages – недостатки

lack – недостаток

jointly – совместно

agreement – соглашение

disagreement – разногласие

to cover – охватывать

liabilities – обязанности

expansion – расширение

to conduct – вести (дело)

II. Read the text: types of business firms

Microeconomics studies particular firms, households, banks, etc. Business organizations may be considered as firms or companies. They produce goods or render services. They also rent or purchase buildings, land, equipment. They market and advertise their products. They deal with government and courts, as well as with banks, insurance companies.

From the legal point of view there are three basic kinds of business firms: 1) proprietorships, 2) partnerships and 3) corporations.

A proprietorship is simply a oneowner firm. The proprietor is responsible for all personal and business debts and losses, he provides the capital and executes the total management. To start the business of this kind it is necessary to obtain licenses required by the law.

The proprietorship form has several advantages, such as: simplicity of organization, freedom to make all decisions, tax advantages, etc. Among disadvantages the following are worth mentioning: possible lack of ability and experience, difficulty of raising capital.

Partnerships are firms owned jointly by two or more persons who are co-owners of business. Partnerships are based on agreement, which should cover all areas of possible disagreements among the partners. Advantages of the partnership may be combined talents, judgements, skills as well as larger capital and tax advantages. Disadvantages of this form are: divided authority, danger of disagreement etc.

Corporation is a firm owned by a group of people, called stockholders, and given rights, privileges and liabilities by law. Advantages of the corporation is variety of skills, abilities and ideas, ease of expansion. Disadvantages of this form of ownership may be as follows: government regulation, profit sharing, taxes.

Corporation has the right to conduct business as if it were one person.

III. Do the following exercises:

Exercise 1. Read the international words and guess their meaning.

business market bank

firm product company

organization to finance basic

production operation corporation

personal management partner

capital to form to combine

license group privilege

limited authority idea

Exercise 2. Match English and Russian equivalents.

1. to purchase stocks a. нести ответственность за

долги и убытки

2. to manage a sales force b. частное владение

3. proprietorship c. владелец акций

4. to be responsible for debts and losses d. покупать акции

5. the only requirement e. руководить

6. to have an advantage f. единственное требование

7. tax advantages g. налоговые скидки

8. possible lack of experience h. иметь преимущество

9. stockholder i. возможный недостаток опыта

Exercise 3. Choose the right word or word-combination.

1. …… is simply a one-owner firm.

a) partnership b) proprietorship c) corporation

2. The proprietor is responsible for all personal and business …… .

a) debts and losses b) banks c) insurance companies

3. …… are firms owned jointly by two or more persons.

a) disadvantages b) liabilities c) partnerships

4. …… is an entity formed and owned by a group of people called

stockholders.

a) profit sharing b) corporation c) tax advantages

5. …… of a corporation are variety of skills, abilities and ideas.

a) unlimited liability b) advantages c) possible lack of ability

Exercise 4. Complete the sentences.

1. To finance the operation business firms deal with …… .

2. There are three basic kinds of business firms …… .

3. A proprietorship is …… .

4. Among disadvantages of proprietorship the following are worth mentioning …… .

5. Advantages of the proprietorship may be …… .

6. Disadvantages of corporation may be as follows …… .

Exercise 5. Insert the necessary prepositions.

1. Business firms are organizations that are engaged … production.

2. To finance their operations business firms deal … banks and insurance companies.

3. The proprietor is responsible … all personal debts and losses.

4. The owner should obtain a license required … the law.

5. Partnerships are based … agreement.

6. Corporation is an entity formed and owned … a group … people.

Exercise 6. Mark the sentences that are true.

1. Business firms market their products, engage in advertising, and manage a sales force.

2. There are three basic kinds of business firms: proprietorships, partnerships, corporations.

3. The proprietorship has several advantages such as variety of skills, abilities, ease of expansion.

4. Corporations are firms owned jointly by two ore more persons who are co-owners of business for profit.

5. Partnership is an entity formed and owned by a group of people called stockholders and given certain rights, privileges and liabilities by law.

6. Disadvantages of corporation are profit, lack of freedom of action, taxes.

Exercise 7. Answer the questions on the text.

1. How many legal forms are available to small firms?

2. What are the legal requirements for starting a business as a proprietorship?

3. What is a partnership agreement? What does it include?

4. What is the corporation?

5. What are the advantages and disadvantages of each type of legal form of small business: a) proprietorship; b) partnership; c) corporation?

Exercise 8. Speak about the types of business firms.

B A N K I N G