What are the different forms of business ownership and what are their dis and adv?
Sole Proprietorship
A sole proprietorship is a business owned by one person who is known as the proprietor.
Advantages Include:
- owner receives all of the profits if the business does well
- The working relationship between partners
- No corporate tax payments
- Minimal legal costs to forming a sole proprietorship
Disadvantage Include:
- owner has a wide range of responsibilities including sales, finances, personnel
- owner is responsible for business its losses (unlimited liability)
- Money to run the business usually come from the owner’s savings, friends, family, or from a bank loan
Partnership
A partnership refers to a type of business in which two or more individuals share the costs and responsibilities of owning and Operating the business.
Advantages Include:
- The liability of the partner for the debts of the business is unlimited.
- Partnerships are relatively easy to establish.
- Partnerships can be cost-effective as each partner specializes in certain aspects of their business.
Disadvantages Include:
- Business partners are jointly and individually liable for the actions of the other partners.
- there is a risk of disagreements and friction among partners and management.
- If partners join or leave, you will probably have to value all the partnership assets and this can be costly.
Corporation
A corporation is a business granted legal status with rights, privileges, and Liabilities (debts) that is distinct from those of the people who work for the business.
Advantages Include:
- Additional capital can be raised easily through stock markets, etc.
- The liability of the owners towards the creditors is limited to their investment in the company.
- Corporations may deduct the cost of benefits it provides to employees and officers.
Disadvantages Include:
- Forming a corporation requires more time and money than forming other business structures.
- Governmental agencies monitor corporations, which may result in added paperwork.
- Double taxation
Co- operative
A co-operative is owned by the workers or members who buy the products or use the services that the business offers.
Advantages Include:
- Generally inexpensive to register.
- All members must be active in the co-operative.
- Members have an equal vote at general meetings regardless of their level of investment or involvement.
Disadvantages Include:
- Longer decision making process
- There is usually limited distribution of profits to members
- Requires ongoing education programs for members.
Franchise
The franchiser essentially licenses the rights to its name, operating procedure, designs, and business expertise to another business called the franchisee.
Advantages Include:
- Brand recognition
- Ready-made business
- Shared marketing
Disadvantages Include:
- There is no creativity of owner
- There is a monthly franchise fee
- Franchise fee is expensive
These are the forms of Business Ownership and the advantages along with the disadvantages
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Some similarity seems to be present here:
https://www.business.tas.gov.au/starting-a-business/choosing-a-business-structure-intro/partnership-advantages-and-disadvantages
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