Business Essay Topic: Forms of Business Organizations

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Business Essay Topic: Forms of Business Organizations

It is important that the business owner seriously considers the different forms of business organization — types such as sole proprietorship, partnership, and corporation. Which organizational form is most appropriate can be influenced by tax issues, legal issues, financial concerns, and personal concerns. This essay explains the general impression of business organizations. A Sole Proprietorship, also known as the sole trader or simply proprietorship, is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business. The owner receives all profits (subject to taxation specific to the business) and has unlimited responsibility for all losses and debts. Every asset of the business is owned by the proprietor and all debts of the business are the proprietor’s. Sole Proprietorships are the most numerous form of business organization in the United States, however they account for little in the way of aggregate business receipts. It controls 72% of business in the United States however, 20% end up filing for bankruptcy. Although the number is large when it comes to income and sales, the number is minute. When starting a sole proprietorship, one should open it when they are certain they won’t fail, file a 1040, and must be cautious that if you violate regulation, you may be out of business because of the government, however, they cant touch your pension.

There are many advantages and disadvantages to this form of business. The many advantages are: ease and cost of information, secrecy, distribution and use of profits, flexibility and control of the business, minimal government regulations, and easy taxation. The many disadvantages are: unlimited liability, limited sources of funds (banks don’t like to lend money), limited skills, lack of continuity, lack of qualified employees, and taxation.

Another form of business

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