Organizational Forms Essay Example | Topics and Well Written Essays - 1750 words

Organizational Forms - Essay ExampleThe major(ip) characteristics of sole proprietorship are as follows financial obligation Liability is the biggest disadvantage in sole proprietorship organizational form. In sole proprietorships, if the concern suffers huge amount of dues which cannot be recovered from revenue, the owner depart be personally liable(p) for paying the entire amount. On the flip side, if proprietor possesses unpaid dues, the creditors can even realize those from the business assets (McGuire, Woods & McLean, n.d.). Income revenue enhancement Sole proprietorship business is a taxable unit. In this business form, there is little opportunity for tax planning, as the owner is completely liable to pay all the taxes derived through income (McGuire, Woods & McLean, n.d.). Longevity or continuity of the organization The longevity of sole proprietorship business depends largely on the creation of its owner (Beatty, Samuelson & Bredeson, 2012). Control In sole proprietors hip, the business owner has the entire control over the resources and business decisions which is a large advantage of sole proprietorship (AllBusiness, 2007). Profit retention The other advantage of sole proprietorship business is that it allows the business owner to enjoy complete profit retention (McGuire, Woods & McLean, n.d.). ... p business is quite easy to set-up with minimum capital however, it significantly depends on the financial ability of the proprietor (McGuire, Woods & McLean, n.d.). General Partnership General confederation is the second type of organizational form which denotes business relationship between individuals forming independent organization through mutual contracts. Liability Liability is an advantage in general partnership because each business associates are mutually and individually responsible for every facet of the business including profit/loss or major decisions (McGuire, Woods & McLean, n.d.). Income taxes Similar to sole proprietorship, general partnership organizational form has a single level of taxation. This type of business does not fall at a lower place the taxable unit, rather it is considered as a tax reporting unit (McGuire, Woods & McLean, n.d.). Longevity or continuity of the organization Longevity is a significant disadvantage of general partnership. There is supposed to be specific time duration for the term of general partnership. The longevity of general partnership depends on the contract. Whenever a partner is discharged from the contract, the other existing partners can take over the vacant place or they can even decide to wind-up the complete business (McGuire, Woods & McLean, n.d.). Control Each business associates possess equal level of control on business decisions (McGuire, Woods & McLean, n.d.). Profit retention Business associates function the gross profits in between themselves and are taxed independently (McGuire, Woods & McLean, n.d.). Location The taxation in general partnership relies on th e principal regulations spot where revenue has been generated (Beatty, Samuelson & Bredeson, 2012). Convenience or burden A common burden in general