Question

Give three main forms of business ownership. Give an example of an advantage and a disadvantage for each form. Finally, give an example of a company for each of the main forms of business ownership.

Answer 1

1.  Sole Proprietorship- A sole proprietorship is an enterprise owned by a single individual or, in some cases, a couple. Simplicity is the principal advantage of the "sole prop." There is no paperwork to set up one because you are the company, quite literally.
There is no legal separation between you and the business. It ensures that the revenues of the company are your earnings, the debts of the business are your obligations and the revenue of the business is calculated as your personal income. The lack of distinction is also the biggest drawback of a sole proprietorship: You are personally responsible for all of the company's debts, taxes and other financial obligations, including legal decisions. This is regarded as "unlimited liability"

A bookkeeping business provides for other businesses ' financial needs. A bookkeeper posts to an accounting system the revenues, expenses and other financial data of a company. This provides accurate financial information to the business owners regarding their business. The financial information a bookkeeper maintains is used to prepare the tax returns for a company.

2. Partnership- A partnership is a jointly owned enterprise of two or more persons whose ownership shares, rights and responsibilities should be outlined in a partnership agreement. Partnerships have the advantage of simplicity too. There is little paperwork involved, beyond the partnership agreement. Unlike sole proprietorships, corporations themselves do not pay income taxes. Instead, they file a tax return showing how much profit they've made, if any, and then the partners pay taxes as personal income on that benefit. Partners will be taxed on profit irrespective of whether they actually got that profit in cash. Even though the money has been reinvested in the business, it still has to pay taxes on it. At least one partner in any relationship must be a "general partner," who has unlimited liability for the debts of the company.

One of the biggest benefits of doing a co-branding campaign is having the chance to introduce a service or product to a new audience. That's what Pottery Barn and Sherwin-Williams did when they came together in 2013. They created an exclusive line of paints together and then put a new section on the website of Pottery Barn to enable customers to choose easily which paint colors they wanted so that they could choose their furniture

3. Corporation- A company is a shareholder controlled organization. For "limited liability," this type of business ownership covers the owners. This means you can lose the money you invest in the company, but beyond that, debts and other financial obligations belong to the company, not to the shareholders. That is the key benefit of being integrated. On the downside, corporations are required to pay income tax on their profits. Any profits distributed as dividends to the owners will again be taxed as personal income of the owners, meaning corporate profits are subject to "double taxation." Incorporating also involves legal formalities, including filing incorporation articles with the state, following the state of incorporation's corporate requirements and issuing stock, even if you are the sole shareholder.

Apple Inc., Walmart Inc., and Microsoft Corporation are all examples of corporations.