Choosing the Right Form of Business Organization

1574 Words Jan 7th, 2018 6 Pages
Business organization forms were hence established by law and are regulated in their operations. There is a wide range of these business organizations, but the major ones are sole-proprietorship, limited liability companies, corporations and partnerships (Baron & Shane, 2008, p. 244).
In establishing a business organization entity, there are various factors considered. These include the simplicity of configuration; business organization ought to be simple to form. It should involve negligible formalities and not consume much time. Secondly, the entrepreneur should consider the accessibility of capital to cater for start-up costs. If investment requirements are too large and there is no secure assurance of returns, investors and other sources of capital may not be willing to contribute the capital. Liability of risks of losses and debts should also be considered. It is significant for the business enterprise to have a clearly defined stipulation of dealing with such occurrences.
Moreover, the relation between ownership of business and management and control is also key to form of business entrepreneur may invest in (Baron & Shane, 2008, p. 272). If management of business is too independent from the ownership, it may not work well for the owner in case mismanagement case results. Stability and continuity of…
Open Document