There are three main forms of business organization: sole proprietorship, corporation and partnership. Sole proprietorship is the simplest way to set and run business, because a sole proprietor is the only responsible person for all company’s debts and obligations. The sole proprietor is allowed to run his business under his own name without any other words. There are many small groceries and stores in my community – for example, plumber service “Flush”. Advantages: all profits are received by sole proprietor, relatively low start-up costs and capital, the greatest freedom from regulation, minimal working capital, tax advantages to owner of the business, owner has the direct control over the decision-making process. (Adelson, 2002)
Partnership is an agreement when two or more sides (persons) are going to combine their available resources in one business. Partnership agreement has to be signed with the assistance of lawyers, because in case of dissolution or disagreement the business should protect its shareholders or other partners. According to the agreement terms partners has to share in all the profits. Fuel Cell Partnership represents this form of organization in my community. Advantages: easy formation, relatively low start-up costs, additional available resources of investments, possible tax advantages, limited regulation and broader base of management. (Lucas 2002)
Corporation is known to be a legal entity “that is separate from its owners, the shareholders”. Shareholders are not personally responsible for debts and obligations and acts taken. Corporation can be either private or public. Private corporation can formed by one or more persons and it is not allowed to share securities to the general public. Public corporation issues securities and shares for public distribution. For example, Dell Corporation and Microsoft Corporation are the most powerful representatives in my community. Advantages: limited liability, specialized management, continuous existence, separate legal entity, possible tax advantages, easy raising of capital and ownership is transferable. (Klein, 2002)
Adelson, B.J. (2002) Should You Have a Partner? Retrieved June 13, 2008, from http://www.myownbusiness.org/s4/index.html
Klein, B. (2002) Business Organization and Finance: Legal and Economic Principles. Foundation, ISBN 1-58778-713-X.
Lucas, Joseph. (2002) Types of Business Organization
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