Business Structures Episode #502

LESSON LEVEL Learning Objectives

Grades 6-8 1. Learn the two basic types of U.S. business organizations:
for-profit and non-profit.
Key topics 2. Become familiar with different business structures.
Business Structures 3. Identify advantages and disadvantages of each entity.
Profit
Liability NATIONAL STANDARDS CORRELATIONS
Aligned to National Financial Literacy Standards from the
Jump$tart Coalition for Personal Financial Literacy in the
Entrepreneurs area of Financial Responsibility and Decision Making.
& Stories Overall Competency:
UrLocker – Jason
Apply reliable information and systematic decision making
Black Smith Skate Shop –
to personal financial decisions.
Denard & Regis
Frying Dutchmen – Standard 4:
Ben & Jacob Make financial decisions by systematically considering
Hives for Lives – alternatives and consequences.
Carly & Molly Aligned to Voluntary National Content Standards in
Twin City Riot Roller Derby Economics from the Council for Economic Education.
Standard 2:
Episode Synopsis Decision Making
What structure is right for Standard 10:
your future business? Will Institutions
your business be for-profit or
non-profit? It’s not just about
LLCs, sole proprietorships,
or partnerships. Examine the
pros and cons of each business
structure and discover which
Contents
Lesson Prep & Screening
one could be right for you. Activity #1
Curriculum Connections
Activity #2
Biz Terms Vocabulary
Family Activity Sheet
 Business Structures • Episode #502

lesson prep &

Screening
Getting Started About the Episode
Familiarize yourself with the What structure is right for your future business? Will your business be
episode ahead of time. It will for-profit or non-profit? It’s not just about LLCs, sole proprietorships, or
serve as a springboard for student partnerships. Examine the pros and cons of each business structure and
learning, discussions, vocabulary discover which one could be right for you.
exploration, and hands-on activi-
ties. Determine what is required to Preview Questions
show the episode in your class- Think about businesses in your area. What do you think business
room and borrow equipment if owners had to do to start their businesses? (Responses may include a
needed. Choose an activity (each business license, name, raise capital, keep records, choose a business
one takes between 45-60 minutes), structure, pay taxes, and more.)
and gather supplies. Have fun!
What do the terms “for-profit” and “non-profit” mean to you?
Equipment & Supplies What are some questions you would ask if someone wanted you to
For all activities, students will be a partner in their business?
need a pen or pencil. Additional
equipment needs are identified on Summary & Conclusion
activity pages.
Episode #502 introduced you to young entrepreneurs who chose their
business structures based on different needs. One of the most important
Screening
decisions you make when starting a business is choosing the type of
Introduce the series and the legal structure. The legal structure will determine the type of taxes your
episode. Then, prior to playing company will need to pay. You will want to evaluate all of your options
the episode, lead your students and get advice from professionals such as an attorney or an accountant to
in a discussion with the preview ensure you make the best choice.
questions on this page. Explain
that Biz Kid$ is a public Family Connection
television series that teaches kids
www.bizkids.com

Distribute a copy of the Family Activity Sheet to each student to share

about money and business. Also
what they’ve learned with their families.
mention that the bizkids.com
website has lots of video clips,
games, a blog, and other resources.

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 Business Structures • Episode #502

Activity #1:

business structure comparisons

Directions
Read the episode details out loud to the class. Hand out the two work-
Activity
sheets titled “For Students” and discussion them together in class. Read
Learning
the Biz Terms and discuss the vocabulary/episode review questions
Objectives
together that are listed on that page. Call on volunteers for answers, and
Identify different have them explain to the group why they chose the term they believe to
business structures. be correct.
Introduce Biz Terms
and definitions used Then, give the students time to complete worksheets. Finally, acting
in the episode. as a facilitator, allow students to discuss the issues. See Curriculum
Connections on page 7 for additional ways to work with Biz Terms.
Episode Details (Note: the definitions are on page 8.)

What structure is right for

Activity Wrap-Up
your future business? Will
Thank the students for their participation, and remind them that business
your business be for-profit
structures are chosen based on different needs. It is important to evaluate
or non-profit? It’s not just
all of the options and get advice from professionals such as an attorney
about LLCs, sole propri-
or an accountant to ensure that they make the best choice when starting
etorships, or partnerships.
their businesses.
Examine the pros and cons
of each business structure
and discover which one
could be right for you.
www.bizkids.com

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 Business Structures • Episode #502

Biz Terms & Episode Review

WORKSHEET FOR STUDENTS

Biz Terms Episode Review

501(c)(3) 1. Jason, owner of “UrLocker,” changed his business structure to a(n)
___________ to gain more protection for his growing business.
Business structure
2. Denard and Regis started their skateboard and T-shirt business as
C corporation
a(n) ________________ but go their separate ways a year later
For-profit leaving one of them as the ______________________________.

Incorporate 3. The Frying Dutchmen chose their business structure to be a(n)

L3C ____________ to give themselves maximum protection and enable
possibilities for future expansion.
Legal liabilities
4. Roderick foiled Tabitha’s plan by becoming a(n) ____________ to
LLC
prevent her from incorporating with his company’s name.
LLP
5. The company “Hives for Lives” is both a ______________
Non-profit organization and a ______________ organization at the same time.

S corporation
6. Scrooge donates to a ________________ organization for the
Sole proprietorship solicitors when he learns that it is tax-deductible!

7. The most familiar exemption from federal corporate income taxes is

the exemption under section ___________________.

8. A corporation is a type of ___________________.

9. All publically-traded companies are ______ corporations.

www.bizkids.com

10. A company with one owner, but whose company name is not
protected is a _________________.

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 Business Structures • Episode #502

business structure comparisons

WORKSHEET FOR STUDENTS

Discuss different business structures as a class. Together, identify the characteristics of each business
structure by marking an X in the cell for each attribute that is true for that structure.

Example Sole General L3C LLP 501(c)(3) C Corp S Corp

Proprietorship Partnership
Owners have
limited liability for
business debts
X X X X X
and obligations.

Sole General L3C LLP 501(c)(3) C Corp S Corp

Proprietorship Partnership
Created by a state-
level registration
that usually pro-
tects the company
name.
May have an
unlimited number
of owners.
May issue shares
of stock to attract
investors.
Owners can report
business profit and
loss on their per-
sonal tax returns.
Owners can split
profit and loss with
the business for a
lower overall tax
rate.
Not required to
hold
annual meetings
or record meeting
minutes.
www.bizkids.com

Extra Credit
Based on what you’ve learned from this episode, what business structure would you choose to start your own
business? Would you be for-profit or non-profit? Why would you make these choices?

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 Business Structures • Episode #502

Activity #2:

BUSINESS PERMIT
& LICENSING ONLINE
DIRECTIONS FOR STUDENTS
Each state has different forms and fees that are required to obtain a business license. You are going to discover
which forms and fees are required for you to create your own business in the state that you live in. For this exer-
cise, we will assume that you want to set up a sole proprietorship, which is the most simple business structure.

Using a computer with internet access, go to your state’s website. For the
state of California, you would type the URL “http://www.ca.gov” or for
Activity
the state of New York, you would type the URL “http://www.ny.gov”.
Learning
Use a web search engine to locate your state’s government website.
Objective
Research requirements In the search box on the state government website, search for “business
in your own state for permit.” Look at the list of results, and try to find which entries will help
business permits you determine which forms you must file and what fees are required.
and licenses.
This may be difficult, and you might have to search for different word
Episode Details combinations to find what you are looking for. Using your paper and
What structure is right for pen or pencil, keep track of the searches you have done. Some example
your future business? Will searches are:
your business be for-profit 1. “business permit”
or non-profit? It’s not just 2. “business license”
about LLCs, sole propri- 3. “business fees”
etorships, or partnerships. 4. “seller’s permit”
Examine the pros and cons 5. “starting a business”
of each business structure 6. “DBA requirements”
and discover which one
could be right for you. If you need help, ask a teacher, a librarian, or a parent to assist you.
When you discover which forms and fees are required in your state for
www.bizkids.com

Supplies a sole proprietorship, print out the forms. Now imagine that you want
Needed to start your own business. Fill in your forms with the name of your
Computers, access to business and other information that would be required. When you have
Internet, and printers. finished, share your business idea with the class.

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 Business Structures • Episode #502

Curriculum Connections
Language Arts
Have students construct sentences; write a paragraph; or create a Optional
story, skit, or dialog using Biz Terms. Vocabulary
Have students create a class dictionary of financial terms Extensions
using Biz Terms.
Have students start their own journal of personal financial Make Art!
education and continue to add to it. Ask students to create
personal illustrated
History/Social Studies glossaries using sketches
Interview a local business owner to learn how they chose their or cartoons to visually
business structure. Ask about the requirements they had to meet to represent the meaning
open their businesses. Are they for-profit or non-profit organizations? of each Biz Term. Invite
students to design a
What kind of business structures built the economy of your com-
stock certificate for their
munity or state? Are those businesses still around or did they change
own companies.
over time?
Investigate what organizations and services in your community, Make It Personal!
region, and state assist or regulate new start-up businesses.
Provide students with
Complete a one-page report on the Internal Revenue Service. dictionaries and ask
students to re-write
formal definitions for
Mathematics
each Biz Term in their
Have students add together the fees discovered during Activity #2 own words to demonstrate
to determine a total cost required to obtain a business license in their comprehension.
state or community for a sole proprietorship.
Ask each student to each survey a business owner in the local
community and create a graph showing 1) whether they are for-profit
or non-profit, and 2) their business structure. Make a class chart of
www.bizkids.com

the data and discuss as a group.

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 Business Structures • Episode #502

Biz Terms DEFINITIONS

501(c)(3): A section of the For-profit: A business organiza- • LLP: LLP stands for Limited
Internal Revenue Service code tion that exists primarily to gener- Liability Partnership. The partners
that provides tax-exempt status ate a profit. The most common in this business structure are liable
for corporations that (1) serve for-profit business structures are: for their own malpractice and not
charitable, religious, scientific, or • Sole proprietorships that of their partners. This works
educational purposes. As part of • Partnerships well for those involved in profes-
this code, no part of the corpora- • Corporations (S Corp, C Corp) sional practices, such as physicians.
tion’s income can be taken for the • Limited Liability Companies
benefit of anyone without justifica- (LLC) (LLP) (L3C) • Non-profit: A non-profit organi-
tion.These organizations are called zation exists to provide a service
501(c)(3) corporations or non- Incorporate: The process of to the community. It is organized
profit corporations. forming a corporation for the under rules that forbid the distri-
purpose of shielding the owner bution of profits to owners. Most
Business structure: The legal and members of the company from non-profits are organized into cor-
status under which a company personal liability. Creditors cannot porations. Each state has specific
operates. There are many different go after personal assets to make up provisions for forming non-profit
business structures to choose from, for company shortfalls. corporations, and at the federal
and examples include both non- level, non-profits follow the rules
profit structures such as a 501(c) L3C: L3C stands for Low-profit outlined in the Internal Revenue
(3) or for-profit structures such as Limited Liability Company. A Service code 501(c)(3).
a C Corporation. new, hybrid business form with a
flexible ownership structure cre- • S Corporation: This organiza-
C Corporation: Business ated to advance charitable pur- tion can only issue one class of
structure which permits a com- poses, but still subject to taxation. stock, and can only be owned by
pany to sell shares of stock in the individuals, estates, certain types
company. All publicly-traded Legal liabilities: Something that of trusts, or qualified pension
companies are C corporations. a person is responsible for, related plans. This business structure is a
These businesses must hold annual to a personal or business debt or tax-efficient way to operate if you
stockholder meetings and keep obligation. A difficulty such as expect short-term losses. By using
meticulous records. Shareholders when the business is involved in this structure you will avoid the
are responsible for losses associ- a lawsuit. double taxation of a C corporation.
ated with the business, however,
the owners of the C Corporation • LLC: LLC stands for Lim- • Sole proprietorship: This busi-
are not liable debts of the business. ited Liability Company. This is a ness structure has one owner as
hybrid business structure which well as fewer requirements, fees,
www.bizkids.com

was created to provide business and paperwork, but it also has

owners with the liability protection greater risks as personal assets are
that corporations enjoy without vulnerable. Your company name
the double taxation. It requires is not protected by this business
minimal company record-keeping, structure.
and there is no limit to the number
of members an LLC can maintain.
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 Business Structures • Episode #502

FAMILY ACTIVITY SHEET

Episode Synopsis Activity Suggestions
What structure is right for your fu- Students will benefit from learning about their own family connections
ture business? Will your business with a variety of business structures. Have a discussion with your family
be for-profit or non-profit? It’s not about business structures. The following questions might facilitate
just about LLCs, sole proprietor- the discussion.
ships, or partnerships. Examine
the pros and cons of each business If there is a family business, share your type of business structure,
structure and discover which one and find out why it was chosen and if it has ever been changed.
could be right for you. If family members work for a company, is the company that they
work for a for-profit or a non-profit organization? Why does it
qualify for that designation?
With family members, try and list non-profit organizations that
benefit your local community.
If your child is interested in starting a business, help them investigate
your state and local requirements for starting a business.
www.bizkids.com

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fun financial literacy on public tv and at www.bizkids.com

Produced by: Biz Kid$ LLP

Funded by:

Co-Produced by:

Distributed by: