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6.3. Read the text.

1. Businesses are structured in different ways to meet different needs.

2. The simplest form of business is called an individual proprietorship. The proprietor owns all of the property of the business and is responsible for everything. This means that the proprietor gets all of the profits of the business, but also must pay any debts. The law recognizes no difference between the owner and the business.

3. Another kind of business is the partnership. Two or more people go into business together. An agreement is usually needed to decide how much of the partnership each person controls.

4. There are limited liability partnerships. These have full partners and limited partners. Limited partners may not share as much in the profits, but they also do not have as many responsibilities. Doctors, lawyers and accountants often form partnerships to share the profits and risks of doing business.

5. Partnerships can end at any time. But limited liability partnerships and individual proprietorships exist only as long as the owners are alive.

6. The most complex kind of business organization is the corporation. Corporations are designed to have an unlimited lifetime. Corporations can sell stock a way to raise money. Stock represents shares of ownership in a company. Investors who buy stocks can trade their shares or keep them as long as the company is in business.

7. A company might use some of its earnings to pay dividends as a reward to shareholders. Or it might reinvest the money into the business. If shares lose value, investors can lose all of the money they paid for their stock. But shareholders are not responsible for the debts of the corporation.

8. A corporation is recognized as an entity — its own legal being separate from its owners. A board of directors controls corporate policies. The directors appoint top company officers. The directors might or might not hold shares in the corporation. Corporations can have a few major shareholders. or ownership can be spread among the general public.

9. But not all corporations are traditional businesses that sell stock. There are nonprofit groups that are also organized as corporations.

6.4. Match the words with the definitions:

(A) individual proprietorship (B) partnership

(C) limited liability partnership (D) corporation

1. How is the simplest form of business called?

2. How is the most complex kind of business organization called?

6.5. Mark two answer choices that are closest in meaning to the word

needs

(A) people (B) necessities (C) partners (D) wants

proprietor

(A) shareholder (B) stockholder (C) householder (D) owner

6.6. Answer the questions:

1. Why are businesses structured in different ways?

2. What is the proprietor of the business responsible for?

3. Which document is usually needed to decide how much of the partnership each person controls?

4. How much may limited partners share in the profits and in responsibilities?

5. What are corporations designed for?

6. What can corporations do to raise money?

7. Must investors who buy stocks trade their shares or keep them as long as the company is in business?

8. Who can lose all of the money they paid if shares lose value?

9. What kind of board controls corporate policies?

10. Can a director have shares in the corporation?