Forms of Business Organization (Essay Sample)

Forms of Business Organization
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Forms of Business Organization
One of the former policy choices you will have to make as a businessman is how to structure your company. All companies must have some kind of legitimate framework that respects the rights and responsibilities of those involved in the company's ownership, potential legal responsibility, duration, and financial organization (Gabaldon & Sagers, 2018). This decision creates long-term consequences, so one may need to seek advice from an auditor. Some of the factors to consider include:
• The desired level of influence.
• The amount of "framework" one is ready to deal with.
• The company's susceptibility to legal action.
Following is an outline of the suitable fundamental forms of business: sole proprietorship, partnerships, corporations, and limited liability companies.
Sole Proprietorship
Sole proprietorships are the foundation of the huge popular of small businesses. These businesses are usually run by a single person, who is also in control of the daily operations. Sole proprietorships own all of the company's assets as well as its profits (Sharma, 2019). They also take full responsibility for any obligations or debts incurred by the company.
Benefits of a Sole Proprietorship
• The simplest and cheapest form of proprietorship to set up. 
Disadvantages of a Sole Proprietorship
• Sole owners have unlimited obligation and are lawfully obligated to pay all obligations owed by the company (Gabaldon & Sagers, 2018). Their personal and business assets are in jeopardy.
• They may face a difficulty when it comes to gathering funds, and are frequently limited to spending funds from private savings or purchaser loans.
Partnerships
A Partnership form of business is created when two or more people share proprietorship of a single company. The law, like that of sole businesses, makes no distinction between the company and its proprietors. Associates should have a lawful contract which outlines how judgements will be made, revenues will be pooled, differences will be decided, future associates will be acknowledged to the partnership and how the business will be dissolved if necessary.
Advantages of a Partnership
• They are simple to form; nevertheless, time should be spent creating the partnership contract.
• When there are multiple proprietors, the capability of raising funds may be increased.
Disadvantages of a Partnership
• Revenues must be shared with others, and partners are jointly and individually liable for the actions of their fellow partners.
• Since decisions are made collaboratively, differences are possible.
Types of Partnerships that should be considered:
1. Limited Liability Company
Partners split management and obligation responsibilities, and the income statement shares, according to their internal agreement. Unless a legal contract states otherwise, equal securities are assumed.
2. Limited liability Partnership implies that the majority of the partners have limited obligation in addition to limited input into managing decisions, which normally inspires investors to invest in short-term projects or capital assets.
3. Joint VentureActs similarly to a general enterprise, but is plainly for a short time or a separate project. Therefore, if the associates in a joint project repeat the job, they are identified as a continuing partnership and must file like that, as well as allocate cumulative business assets upon the entity's termination.
Corporations
This is a firm established by the government in which it is managed and is legally recognized as a distinct entity. A corporation may be taxed, prosecuted, and enter into predetermined agreements (Gabaldon & Sagers, 2018). A board of directors is elected by the shareholders to oversee major guidelines and decisions.
Advantages of