FORMS OF BUSINESS ORGANIZATION

GROUP MEMBERS

M. ASHFAQ KHAN (2722) DAWOOD KHAN (2764) KASHIF REHMAN (2778)

CONTENTS

• SOLE PROPRIETORSHIP• PARTNERSHIP (general & limited)• CORPORATION• LIMITED LIABILITY COMPANY

SOLE PROPRIETORSHIP

A sole proprietorship is a business owned and operated by one

individual

Advantages

• Easy to start• No registration• No profit sharing• Easy decision-making• Easy to windup• Secrets (information about business

techniques)• No corporate taxes

Disadvantages

• Unlimited liability• Employee benefits i-e Medical

insurance premiums not deductible(taxes)

• Raising funds• Limited Life• Loss in absence

Partnership

A Partnership is a legal relationship formed by the agreement between two or more individuals to carry on a business as co-owners.

Types of Partnership: General Partnership Limited Partnership

Advantages

• Relatively easy to start• The ability to raise funds• More skilled persons• Loss sharing• No Loss in absence

Disadvantages

• Unlimited liability• Profit sharing• Conflicts• Limited life• Transferability is difficult

Corporation

A corporation is defined as a legal entity or structure created under

the authority of a state's laws, consisting of a person or group of

persons who become shareholders.

Advantages

• Limited liability• Unlimited life• No loss in absence• Easier to raise capital• Fringe benefits are tax deductible• Easy transferability of ownership

Disadvantages

• More expensive to form• More legal formality• Double taxation• Agency problems• Division of profits• Leaking of business secrets

Conclusion

The best form of organization is LLC(limited liability company).Its a

hybrid form of partnership and corporation. Positive features of partnership & corporation are

combined. i-e Members are having limited liability and for taxation it is

treated like partnership.