Question

Which ownership is this "You are considering purchasing a business that is for sale in your hometown. This is your opportunity of becoming a business owner by purchasing an existing business. Mr. Jacobs, the present owner, wishes to retire so he is looking for someone to purchase his business including the inventory and shop. After some market research and auditing his books, you decide to purchase the business."

Answer 1

You are in the process of buying an existing business, which is an example of a sole proprietorship transition. As the sole owner, you will have full control and responsibility over the business, including its profits, debts, and liabilities. Exiting or transferring ownership, as the current owner is doing, is also more straightforward compared to other business structures.

Step-by-step explanation:

From the scenario provided, you are about to enter the world of business ownership by purchasing an existing business from Mr. Jacobs. This acquisition appears to be a classic example of a sole proprietorship transition, where a business owned by a single individual is being transferred to another. Sole proprietorships are characterized by several key features, such as the ease of startup and management, where the owner has direct control over all business decisions, including the enjoyment of all profits.

However, with this great control comes great responsibility, as the sole proprietor is also solely responsible for any debts or liabilities the business may incur. Profits from the business do not undergo separate business income taxation, as they are considered personal income to the owner. There's also a psychological advantage, where the owner feels a direct impact of their investment and strategy. When it's time to move on or retire, as Mr. Jacobs is doing, exiting the business or transferring ownership is relatively straightforward compared to more complex business entities.

Another aspect of business ownership includes the consideration of acquiring a franchise. Franchising involves purchasing the rights to operate a business using the franchisor's brand and model. However, in this scenario, you are buying an independent business outright, and the concerns of franchise fees or royalties do not apply.

Also, it is critical to recognize that when owning a business with a considerable number of shareholders, the way the company raises funds can be through the sale of shares. However, in the secondary stock market, the company itself does not receive financial benefits from trades between shareholders. This contrasts with sole proprietorship income, which is directly related to the owner's personal finances.

Answer 2

Business Ownership

This is purely a Sole Proprietorship type of business ownership.

Step-by-step explanation:

Some of the characteristics of a sole proprietor business are indicated in the scenario. The former business is owned by Mr. Jacobs, according to the scenario, "the present owner." Mr. Jacobs is desires of retiring and selling off his shop. What are the assets of the business? They mainly consist of Inventory of merchandise and the shop itself, which may be rented. This is the basic form of business ownership globally. Some sole proprietor businesses grow to become conglomerates while others remain one-shop businesses, like Mr. Jacobs'. Perhaps, the second owner may do better and take the business to the next stage.