Business Organization

When Jack was a younger lad he loved to bake. He would bake cookies and cakes all day and all night. One day Jack had the idea to open his very own bakery and so that's exactly what he did. Jack went to the realtor and found the perfect location and then on to the bank to present his presentation. Jack opened his shop and became his own boss, a sole proprietor, entirely owned by him.

Jack worked hard day and night to make his shop grow. Unfortunately it just wasn't growing and doing the amount of business Jack had hoped for. He comes up with an idea. "I Know" Jack exclaims, "My brother is a baker, maybe he would like to form a partnership with me and share the risk and capital in the company!" So Jack gives his brother a call and they form a partnership in the bakery. This way Jack and his brother can be stockholders and owners and share the profits, capitals, and risk of the company.

Even with all of the great marketing skills Jack's brother brought to the bakery they still seemed to have trouble growing the business. The bakery wasn't a total failure and did pull some profit, but Jack and his brother didn't think that it was what it should be. Jack and his brother decided to make it a limited liability joint-stock company and sell stock certificates of its ownership to investors without the investors having to worry about creditors seeking out the personal wealth of the stockholders for reimbursement if the bakery were to go bankrupt. By doing this they are spreading the risk to the company around to outside investors and can use the money invested for better marketing or better supplies, whatever they need to make the business grow and have better profitability.