Organizational Forms

2778 WordsApr 13, 201212 Pages
Organizational Forms A. Explain how at least six of the seven key characteristics listed in the introduction to this task apply to each of the following organizational forms: The goal of this report is to provide the owner of the business with a clear guide to each organizational form as well as how each characteristic applies to each form. A1a. Sole proprietorship A sole proprietorship is a business form in which one person is the owner of the business. Within this form the owner has no legal ties to the business. Since the individual is the only owner of the business he or she is fully responsibly for all loses and debts, but received all profits after taxes. Some of the advantages of a Sole proprietorship ship include; It is…show more content…
· Control-Each partner has equally the same rights as everyone else to make important decisions and a piece of control. · Profit retention-The profits made by the business are usually dispersed equally among the partners. · Location-Moving a business that has multiple partners is no different that a business that is a sole proprietorship. As long as they file a DBA, they are good to go. A1c. Limited Partnership Limited partnership is similar to General partnership; the main difference is that each partner is only liable for the percent or amount of money that they have invested into the business. These limited partners don’t have the same day to day responsibilities of a General partner. Some of the advantages may include; the limited partners get a portion of profits, they can leave and not have to worry about the dissolution of the business, and replacing a limited partner is very easy to handle. Some disadvantages may include; if the business is being sued or is having legal problems or facing debt, the responsibility if only with the general partners, the limited partners are not held liable (Allbusiness.com, 2011). · Liability-In a limited partnership, the general partners are liable for any debt that the limited partners may have. The limited partners however are not responsible for any debt that the general partners have. Only is the investment in the
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