Essay on Benefits and Disadvantages of Sole Proprietorship, Partnership and Corporation

2021-06-09 04:23:58
3 pages
570 words
University/College: 
University of Richmond
Type of paper: 
Course work
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Benefits of the sole proprietorship

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An extraordinary advantage that this type of business has is that it has complete power to control and make decisions as the owner of the business.

The sole proprietorship business is advantageous in that the sales of properties or transfer of shares takes place only in the presence of the proprietor.

Disadvantages of the sole proprietorship

This kind of business is that in the case of any of debts or obligations, the sole proprietor becomes solely reliable for the situations.

Since all the responsibilities lies on the shoulders of the sole proprietor, most investors shy away from investing in such business due to high risks involved.

Benefits of partnership

The advantage of his form of business is that the partners usually share any liabilities that might arise during the managing of the company. They as well make decisions collectively which is important for the management of the organization.

There is always the ease of raising the startup capital since the partners can raise the capital in different percentages as agreed among them. It is important to note that the more the partners, the more the capital that can be raised.

Disadvantages of Partnership

The most obvious disadvantage of such business is usually the disagreements that occur during the daily running of the firm. The disputes usually arise since people might at one time or the other have different views.

There is always an involving in the process of paying tax. The partners have the mandate of paying tax individually just like the sole proprietors. This leads to wastage of time among the business partners.

For the smooth running of the business, the partners have to be in amicable agreement in order to for decisions to be made. This usually takes a lot of time hence leading to waste especially when quick decisions need to be made.

Benefits of corporation

Another important advantage that is evident when forming this type of business is that it allows for the shares to be transferred to other parties in case of any individual wanting to join or leave.

There is always an ease in raising capital for this kind of business. The capital is raised through the sale of stocks. Also, banks easily give corporations loans that help in setting up the business venture.

Disadvantages of corporation

When the profits from this type of organization are distributed among owners, it results to double taxation as the profit is shared to owners as dividends.

Managing a corporation is very involving and time consuming. This is due to the fact that they are required to embrace record keeping by ensuring that the corporation has got organized and clean records for all the meetings conducted by the shareholders and directors. These records are always for both the initial meetings as well as the annual meetings. An overview of a cooperative

Link: http://canadabusiness.caA cooperative business that undergoes through the process of formation, planning, financing and most importantly management. During the starting of such an organization, the following must be achieved which is to reserve the name of the business, fill the documents of incorporation and finally pay the required fees. Such business should be well planned and managed to achieve its objective of the formation. As such, a well-established and analyzed business plan must be formulated and implemented. Finally, the company is financed through the mobilization of the funds through grants and crowd funding.

Reference

http://canadabusiness.ca

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