Various Forms of Business Organizations and Their Characteristics

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Introduction Before starting a business, a business owner should ideally take into consideration the various forms of business organizations and their characteristics. In basic terms, forms of business organization differ on a number of fronts including but not limited to personal liability of owners, ease of formation, etc. This text highlights a number of issues in relation to the various forms of business organization. Part 1 The chart below (chart 1) compares and contrasts my personal liability exposure in relation to the various forms of business I own. Chart 1 EMBED MSGraph.Chart.8 s Generally, a business owner in a sole proprietorship form of business is liable for all claims that may be made against his or her business. Indeed, the unlimited liability of the business owner in this case remains a key disadvantage of this particular form of business. Therefore, to limit liability, a sole proprietor should familiarize himself with the relevant laws governing the operations of his business. When it comes to contracts, the sole proprietor should ensure that he or she fulfills his or her end of the bargain. Further, it can also be noted that, to some extent, a sole proprietor could limit his personal liability by outlining his liability in a contractual document. Personal liability in a general partnership is usually unlimited. In that regard, a general partner could deem it fit to convert to a limited partner so as to limit his liability. Limited partners
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