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Forms of Business Organization Chapter III Section I

Forms of Business Organization Chapter III Section I. 3 Types of Business Organization. Sole Proprietorship Partnership Corporation. 1. 2. 3. Sole Proprietorship. ADVANTAGES Easy to begin Easy to manage. Decisions by one person Profits go to one person Not taxed as a separate entity

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Forms of Business Organization Chapter III Section I

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  1. Forms of Business OrganizationChapter III Section I

  2. 3 Types of Business Organization Sole Proprietorship Partnership Corporation 1 2 3

  3. Sole Proprietorship ADVANTAGES • Easy to begin • Easy to manage. • Decisions by one person • Profits go to one person • Not taxed as a separate entity • Easy to go out of business

  4. Sole Proprietorship DISADVANTAGES • Unlimited liability • Difficulty in raising financial capital • Size and efficiency • Manager often has limited managerial experience • Difficulty in attracting qualified employees • Limited life

  5. Partnership ADVANTAGES • Same as Sole Proprietorship • Lack of Special Taxes • Attract financial capital easier • More efficient due to larger in size • Easier to attract top talent

  6. Partnership Disadvantages • Each partner is responsible for the others actions

  7. Corporation A business organization that is a separate legal entity that has all the same rights as an individual.

  8. Corporation ADVANTAGES • Sell stock to raise capital • Issue bonds to borrow money • Hire professional managers to run the firm • Limited Liability to the owners • Unlimited Life

  9. Corporation Disadvantages *Expenses and Starting a Charter *Owners or Shareholders have little to say once a board of directors runs the business *Double Taxation Corporate tax and then a personal Tax *More Government Regulation

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