1. The four forms of business organization are sole proprietorship, partnership, corporation, and cooperative.
2. A sole proprietorship is owned by one person who has unlimited liability. A partnership is owned by two or more people who each have unlimited liability. A corporation is owned by shareholders who have limited liability. A cooperative is owned by a group of individuals for their mutual benefit.
3. Each form of organization has advantages and disadvantages related to ease of setup, liability, funding ability, and tax implications. The best structure depends on the goals and needs of the specific business.
1. The four forms of business organization are sole proprietorship, partnership, corporation, and cooperative.
2. A sole proprietorship is owned by one person who has unlimited liability. A partnership is owned by two or more people who each have unlimited liability. A corporation is owned by shareholders who have limited liability. A cooperative is owned by a group of individuals for their mutual benefit.
3. Each form of organization has advantages and disadvantages related to ease of setup, liability, funding ability, and tax implications. The best structure depends on the goals and needs of the specific business.
1. The four forms of business organization are sole proprietorship, partnership, corporation, and cooperative.
2. A sole proprietorship is owned by one person who has unlimited liability. A partnership is owned by two or more people who each have unlimited liability. A corporation is owned by shareholders who have limited liability. A cooperative is owned by a group of individuals for their mutual benefit.
3. Each form of organization has advantages and disadvantages related to ease of setup, liability, funding ability, and tax implications. The best structure depends on the goals and needs of the specific business.
1. The four forms of business organization are sole proprietorship, partnership, corporation, and cooperative.
2. A sole proprietorship is owned by one person who has unlimited liability. A partnership is owned by two or more people who each have unlimited liability. A corporation is owned by shareholders who have limited liability. A cooperative is owned by a group of individuals for their mutual benefit.
3. Each form of organization has advantages and disadvantages related to ease of setup, liability, funding ability, and tax implications. The best structure depends on the goals and needs of the specific business.
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FORMS OF BUSINESS
ORGANIZATION Objectives:
To identify the four forms of business
organization. To differentiate the forms of business organization. Sole proprietorship is a business own by only one person, usually the individual who has day- to- day responsibility for running the business. It is easy to set up and it is less costly among all forms of ownership. The owner in this organization faces unlimited liability; meaning the creditors of the business may go after the personal assets of the owner if the business cannot pay them. The sole proprietorship form is usually adopted by small business entities. Advantages Easiest and least expensive form of business to organize. Sole proprietors are in complete control, and within the parameters of the law, may make decision as they see fit. Profits from the business flow through directly to the owner’s personal tax return . The business is easy to dissolve if desired. Disadvantages Sole proprietors have unlimited liability and are legally responsible for debts against the business. Their business and personal assets at risk. May be at a disadvantage in raising funds and are obtain limited to using funds from personal savings or consumer loans. Some employee benefits such as owners medical insurance premiums are not directly deductible from business income ( only partially as an adjustment to income ). Partnership a partnership is a business owned by two or more persons who contribute resources into the entity. The partners divided the profit of the business among themselves. In general partnerships, all partners have unlimited liabilities. In limited partnerships, creditors cannot go after the personal assets of the limited partners. Advantages Partnership are relatively easy to establish; however time should be invested in developing the partnership agreement. With more than one owner, the ability to raise funds may be increased. The profits from the business flow directly through to the partners personal tax return. Prospective employees may be attracted to the business if given the incentive to become a partner. Disadvantages
Partners are jointly and individually liable
for the action of the other partner. Profits must be shared with others. Since the decisions are shared, the disagreement can occur. Corporation
A corporation is a business organization
that has a separate legal personality from its owners. Ownership in a stock corporation is represented by shares of stocks. The owners (shareholders) enjoy limited liability but have limited involvement in the company’s operations. Advantages
Shareholders have limited liability for the
corporation’s debts or judgments against the corporation. Generally shareholders can only be helped accountable for their investments in stock of the company. Corporations can raise additional funds through the sale of stocks. A corporation may deduct the cost of benefits it provides to officers and employees. Disadvantages The process of incorporation requires more time and money than other forms of organization. Corporation are monitored by federal, state and some local agencies, and as a result may have more paperwork to comply with regulations. Incorporating may result in higher overall taxes. Dividends paid to shareholders are not deductible from business income; thus income can be taxed twice. Cooperative A cooperative is a business organization owned by a group of individuals and is operated for their mutual benefits. The persons making up the group are called “members”. Cooperative may be incorporated or unincorporated. Pens up! Q1-4. Enumerate the four forms of business organization.
Q5-10.Give ONE advantage and ONE disadvantage
of each business organization’s form.
Q11. ___________ is a business own by only one
person, usually the individual who has day- to- day responsibility for running the business. Q12. ___________ is a business organization owners (shareholders) enjoy limited liability but have limited involvement in the company’s operations.
Q13.___________ is business owned by two or
more persons who contribute resources into the entity.
Q14.___________ is a business organization
owned by a group of individuals and is operated for their mutual benefits. For no. 15. Bonus
