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In: Finance

There are three major forms of business organizations in the United States; proprietorships, partnerships and corporations....

There are three major forms of business organizations in the United States; proprietorships, partnerships and corporations. Describe the advantages and disadvantages of each form.

Solutions

Expert Solution

Advantages of sole proprietorship form of businesses will be related to that all the decision making and the control will be lying in the hands of the one person and all the profitability will be taken by one person so he will have the sole ownership of the business.

disadvantages related to sole proprietorship form of business will be that there will be unlimited liability related to the ownership and there will also be no perpetual existence of the business.

Advantages related to the partnership form of business is that they are easy to get started and there will be sharing of burden by various partners. ownership and control are combined as well as there will be access to knowledge and there will be a high degree of confidentiality and privacy.

Disadvantages related to partnership form of business are that they will be having unlimited liability when it comes to the partners and there will be Limited capital and there will also be difficulty regarding transfer of shares.

Advantages related to the corporation form of businesses that it is providing the owners with the limited liability and there will be a perpetual existence and separation of the ownership and management and there will be access to the financial market available.

Disadvantages related to the corporation form of business is that there are double taxation involved and there are no confidentiality and there are also high cost information and there will be higher cost which are paid to the management and there will also be leading to agencyconflict.


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