Question

What are the different forms of business organizations? How do different organization forms impact control and access financing? How will you decide the appropriate organizational form for a business?

Answer 1

Different forms of business organisations are as follows-

A. Sole proprietorship is a form of business organisation in which the entire control and risk which will be shared by one and only sole proprietor and he will be responsible for all risk and return and his liability will be unlimited

B. partnership form of business is another form of business in which many of the individuals will be coming together at partners and these individuals will be having unlimited liability and partnership will also offer them a scope of conducting business a larger scale but partnership will also not have any kind of perpetual existence

C. Corporation form of business is a business in which the existence of Corporate company will be separate from the member and it will have perpetual existence and the liability of the members will be always Limited in nature and it will have higher possibility of growth and expansion and access to the capital market .

Sole proprietorship generally have highest control where as shareholders have Least control on the firm & access to financing of company form of business will be highest whereas partnership and sole proprietorship does not have much access to capital market

I will decide the appropriate form of organisation after determining my level of risk and determining my liability and the access to the capital market as well as the external interference into the business.