Forms Of Business Organization

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Trade is the willingness to exchange goods and services between sellers and buyers in the market. From the perspective of both developing and developed countries, trade is beneficial to economic development and growth. A business is an organization which uses scarce resources to provide goods and services to customer exchange for money or other type of goods and services. According to Garrison (2014), the forms of business organization is influenced by tax issues, legal issues, financial concerns and personal concerns. Before conducting a business, it is crucial for the owner to consider the type of business entity that should be formed. In general, there are three basic forms of business organization: sole proprietorship, partnership, and…show more content…
First, this form of business organization is easy to form. Garrison (2014) mentioned the owner can build up the business as simple as using printed business card or hanging advertising banner to inform people. The owner owns all the profits and assets of the business. In addition, in the aspect of governing law, this form of business entity neither has formal documents nor filling form required. Even sole proprietorship has licensed by the government, but it does not have specific status (Malm & Agostine, 2004). Thus, the business is said to have fewer regulations and rules (Garrison, 2014). Furthermore, sole proprietorship has no corporate income taxes. Garrison (2014) stated, “any income realized by a sole proprietorship is declared on the owner's individual income tax…show more content…
A company is a form of business organization that is under two or more ownership. According to Thomas and Ward (2012) companies can own assets and take action in their own right. Companies can be divided into two types which are public limited companies (plc) and private limited companies (Ltd). According to the law, incorporated companies have to include the abbreviated ‘plc’ or ‘Ltd’ in their name to ensure stakeholders is aware of the company’s status. Public limited companies offers shares to the public on recognized shared exchanges such as the Bursa Malaysia. When a company is formed its ownership is split into shares. These shares are then sold on stock exchanges to members of the public. Each owner is represented by the shares of stock in an ownership stock corporation (Garrison, 2014). Plcs are commonly known as listed companies because they are listed as members of stock
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