Question

Why are there so many more proprietorships than​ corporations, yet corporations account for so much more of the sales of business firms in the​ country?

Answer 1

A sole proprietorship is a type of business run by one person and is considered the smallest type of business organization in size, yet the most numerous and profitable. Since proprietorship are easy to start-up and manage, pays no income taxes, ( only owner's personal income is taxed). owner gets all profits and there is a satisfaction from owning one's business- therefore for all these reasons, sole proprietorships are more in number. However, it also has some major issues. The owner has unlimited liability, it is difficult to raise financial capital and the owner might not be able to operate efficiently because of limited managerial experience. The business has limited life and legally stops existing when the owner dies or sell the business.
On the other hand, a Corporation is a business organization recognized by law as a separate legal entity with all the rights of an individual. It has many size advantages including division of labour and economies of scale that increase its productive capacity which boosts sales and profits. It is easier to raise capital in corporations, and professionals can be hired to run the firm instead of the owners. (shareholders)
Owners have limited liability and the life of the business is unlimited, it goes beyond the life of the owner and it is very easy to transfer ownership without hindering production.