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Hospitality Business
Structures
Unit Objectives:
Explain the importance in selecting the proper
Topics
The importance of business structure
Common hospitality organizational structures
Common hospitality operating structures
The agency relationship
Common Hospitality
Organizational Structures
Sole Proprietorship
General Partnership
Limited Partnership (LP)
C Corporation
S Corporation
Limited Liability Company (LLC)
Sole Proprietorship
A single individual owns all of the business
General Partnership
Similar to Proprietorship but there are two or
more owners.
The owners are also jointly and severally
liable for its debts.
Profits are taxed as individual rate.
The ownership can be transferred per
partnership agreement.
Limited Partnership
(LP)
There are two classes of owners:
Limited Partner
C Corporation
Corporation or C Corporation
Group of people invest together.
The corporation is responsible for the debts.
The structure deals with double taxation:
Corporate rate and Individual rate
Profits are taxed as corporate rate.
Dividends are taxed as individual rate.
S Corporations
S Corporation can avoid the double taxation.
There are some requirement to maintain S
Corporations status.
The corporation is responsible for the debts.
But the shareholders are responsible to pay
the taxes.
Profits are taxed as individual rate.
members.
The company is responsible for the debts.
Members are responsible for the taxes.
Profits are taxed as individual rate
Owner-Operator
The owner is responsible for its day-to-day
operation.
Franchise
Franchise is a contract between a Franchisor
Management
Contracts
The owner hires the management company to
operate a business.
The management contract is a legal
agreement that defines the responsibilities of
a business owner and the management
company.
REIT
REIT Real Estate Investment Trust
The owners as REIT can own properties but in
Condo Hotels
A multiple unit complex that can have hotel,
The Agency
Relationship
The relationship between businesses and their
Independent contractor
a person or entity that contracts with another to
perform a particular task but whose work is not
directed or controlled by the hiring party. The
employer has very little control over the
conduct of the independent contractor.
The Agent-Principal
The principals are held responsible for the