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Business Organization

Uploaded by xo.ox on Mar 19, 2006

There are many types of business in the business world. Form the small one to the large one. Choosing the form of business organization is an important decision because it can be critical to the success or the failure of the business organization. Each form of business organization has its advantages and disadvantages.

Things that can be taken to consideration in choosing the type of business: your objectives in setting up the business organization, the amount of capital used up to set the business organization, level of control you wish to have, level of "structure" you are willing to deal with, the business's vulnerability to lawsuits, tax implications of the different ownership structures, expected profit (or loss) of the business. There are essentially three basic ways to set up your business: sole proprietorship, partnership, and corporation. Each of these has advantages and disadvantages.

The purpose of this paper is to show what business organizations is and help you to differentiate the types of business organization. In particular, the scope of this paper will be confined to the awareness of business organizations as one way to improve your knowledge in management. This paper will discuss about types of business organization, affects how it operates, how tax is paid, its advantages & disadvantages and how much control its owners have.

Sole proprietorships
Sole proprietorship is a form of business organization in which an individual is fully and personally responsible for all the obligations of the business, and is entitled to all of its profits and exercises complete managerial control. For example, school canteen, florist, salons, etc. The person who owned this form of business is called as a sole proprietor or sole trader.
Sole proprietor (the owner of a sole proprietorship) is personally responsible for all debts, taxes, liabilities and claims made against employees acting within the scope of their employment. Any income that is earned from the business is considered sole proprietor’s income. The sole proprietorship itself is not separately taxed on its income. Instead, the sole proprietor reports business income and expenses on his or her own tax return. This means that the net income from the business is taxed only once.
When the owner of a sole proprietorship dies, the sole proprietorship simply ends. All the assists that the business owns will then just pass under the will of the owner or in accordance with the inheritance law.

Advantages of a Sole Proprietorship
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Uploaded by:   xo.ox

Date:   03/19/2006

Category:   Business School

Length:   10 pages (2,206 words)

Views:   19829

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