Organizational Forms
Organizational Forms
A. Explain how at least six of the seven key characteristics listed in the introduction to this task apply to each of the following organizational forms:
The goal of this report is to provide the owner of the business with a clear guide to each organizational form as well as how each characteristic applies to each form.
A1a. Sole proprietorship A sole proprietorship is a business form in which one person is the owner of the business. Within this form the owner has no legal ties to the business. Since the individual is the only owner of the business he or she is fully responsibly for all loses and debts, but received all profits after taxes. Some of the advantages of a Sole proprietorship ship include; It is the least expensive form of organization to run, the owner has complete power over the business, although not a great situation, the business can be easily closed if the owners chooses for any reason. Some disadvantages include; the owner is fully and legally responsible for any debt, many high level employees usually don’t seek employment for Sole proprietorship based companies, and could be at a disadvantage in raising any kinds of funds (Wikipedia.com, 2012) · Liability- Liability in this form is one of the biggest downsides. Since the owner has full responsibility of everything that goes on, having the right amount of insurance can protect in the even of a lawsuit. · Income Taxes- Taxes are another huge downside to a Sole Proprietorship. Since you gain from all the profits made, you are also responsible for the taxes since they are self employed based. · Longevity or continuity of the organization- The owner is this case can determine at any time when to dissolute the organization. Of course if the company is doing well, the best idea would be to remain open. If the company is struggling, it is easier compared to other forms to close the business. · Control-The owner has total control of a Sole proprietorship. This
A. Explain how at least six of the seven key characteristics listed in the introduction to this task apply to each of the following organizational forms:
The goal of this report is to provide the owner of the business with a clear guide to each organizational form as well as how each characteristic applies to each form.
A1a. Sole proprietorship A sole proprietorship is a business form in which one person is the owner of the business. Within this form the owner has no legal ties to the business. Since the individual is the only owner of the business he or she is fully responsibly for all loses and debts, but received all profits after taxes. Some of the advantages of a Sole proprietorship ship include; It is the least expensive form of organization to run, the owner has complete power over the business, although not a great situation, the business can be easily closed if the owners chooses for any reason. Some disadvantages include; the owner is fully and legally responsible for any debt, many high level employees usually don’t seek employment for Sole proprietorship based companies, and could be at a disadvantage in raising any kinds of funds (Wikipedia.com, 2012) · Liability- Liability in this form is one of the biggest downsides. Since the owner has full responsibility of everything that goes on, having the right amount of insurance can protect in the even of a lawsuit. · Income Taxes- Taxes are another huge downside to a Sole Proprietorship. Since you gain from all the profits made, you are also responsible for the taxes since they are self employed based. · Longevity or continuity of the organization- The owner is this case can determine at any time when to dissolute the organization. Of course if the company is doing well, the best idea would be to remain open. If the company is struggling, it is easier compared to other forms to close the business. · Control-The owner has total control of a Sole proprietorship. This