Explain the forms of business organization: 1- Sole proprietorship: 2- partnership: 3- corporation:

Explain the forms of business organization:

1- Sole proprietorship:

2- partnership:

3- corporation:

Solutions

Expert Solution

1) Sole Proprietorship : It is the form of business which is undertaken by a single individual who both owns as well as manages it and is free to take any decision without the interference of anyone. This business form involves being accountable for both the losses as well as the gains of the business and the owner solely enjoys the management powers. The sole proprietorship form is easy to start and easy to dissolve with paying off to all the creditors. However the biggest disadvantage of business is that it has unlimited liability which means that if the debt of business could not be paid off by the assets and profits then the owner would have to reimburse the creditors from the personal property.

Partnership : When two or more individuals join together to undertake a business , they pool funds and resources to carry out the business operations together is called a partnership firm. Here the partners share the stake in profits and losses either equally or in a definite mentioned proportion . The partners also share management powers in an agreed criteria. The partnership should be registered under law to enjoy various benefits. The specifications between the partners regarding different decisions is known as partnership deed. The firm enjoys more access to funds than the partnership form, but is also limited liability firm where partners will be personally and directly accountable for unpaid debt.

Corporation This is a form of business which is formed by joining hand together to enjoy profits of the business. The owners are called the shareholders of business and there is a separate management to undertake the daily operations of busines. The corporation firm if business involves more tedious regulations and government interferences as it's a public figure in the environment. The corporate veil is a special feature of a corporation which enables the business to have a separate legal existence , separate from its owners. The corporation enjoys limited liability and looses can be recovered only up to the property , assets and profits of business organization with no risk to personal property of shareholders. It is more accountable to public and stakeholders.

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keosha answered 1 year ago

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