Business Ownership Research Paper

986 Words4 Pages
Are forms of business ownership important for economy ? Why is business ownership important to economy ? Nowadays, developing and growing in the World, economy is the most basic element for countries. The economy encompasses all activity related to production, consumption and trade of goods and services in an area. Business owners have many affects on the economy. The form of business describes how a business is legally set up. In other words, the form of business ownership is the business’ legal structure. The most common form of business ownerships are the sole proprietorship, partnership and corporation. What are the disadvantages and advantages effect of a forms of business ownership ? I will explain this paper. Firstly, sole…show more content…
Hence, the share of risk of each partner is less in comparison to sole proprietorship. Eventhough, partnership form of business is comparatively better than sole proprietorship form of business, still it is not the only best option available to an entrepreneur. Like that of the sole proprietorship, unlimited liability is a important drawback of partnership. The risk of loss of private property of the partnership influences the partners to avoid further risk and play safe. There is a limit to the maximum number of partners in a partnership Therefore, the capital that can be raised from the partners is limited. Large-scale business requires huge capital and partnership is not the proper form to meet the…show more content…
The corporate legal structure receives a number of advantages and obligations from the state. These laws enable the corporation to overcome the limitations of any one individual—like a human lifespan or limited productive capacity—and to accumulate and distribute profits among the various stakeholders. A corporation, unlike a sole proprietorship, is a separate entity from the business owner, which offers advantages in terms of protecting the owner's personal assets. But a corporation is also distinctive in its formation, taxation and its owners’ liabilities. Corporations have some disadvantages. Double taxation is disadvantage of some corporations. C corporation profits are taxed as income for both the corporation and its shareholders. Consequently, the corporation reports and pays taxes on corporate profits, shareholders are taxed on the profits they receive from the corporation as personal income, and the corporation’s management pays taxes on the salaries, bonuses and dividends they receive. If the corporation’s leaders are also shareholders, they pay taxes on their share of the distributed profits, as well as their compensation. A primary advantage of choosing to operate a business as a corporation is that neither its owners nor shareholders are ordinarily liable for a corporation’s debts and risks. In the event a business is sued, the assets of the corporation are at risk, but not the assets of the
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