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Table 6.1: Summary of Pros and Cons of Various Forms of Business Organization As To Ownership Proprietorship Partnership Corporation Advantages | PDF | Partnership | Corporations
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Table 6.1: Summary of Pros and Cons of Various Forms of Business Organization As To Ownership Proprietorship Partnership Corporation Advantages

This table summarizes the pros and cons of different forms of business organization in terms of ownership: proprietorship, partnership, and corporation. For proprietorship, the main advantages are simplicity, low cost, and sole ownership of profits and control, while disadvantages include unlimited liability and limited resources. Partnerships provide ease of establishment and a larger capital pool and talent pool than proprietorships, but partners have unlimited liability and difficulties dissolving the partnership. Corporations allow limited liability for stockholders and easier capital raising, but involve higher costs and legal restrictions.

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68 views2 pages

Table 6.1: Summary of Pros and Cons of Various Forms of Business Organization As To Ownership Proprietorship Partnership Corporation Advantages

This table summarizes the pros and cons of different forms of business organization in terms of ownership: proprietorship, partnership, and corporation. For proprietorship, the main advantages are simplicity, low cost, and sole ownership of profits and control, while disadvantages include unlimited liability and limited resources. Partnerships provide ease of establishment and a larger capital pool and talent pool than proprietorships, but partners have unlimited liability and difficulties dissolving the partnership. Corporations allow limited liability for stockholders and easier capital raising, but involve higher costs and legal restrictions.

Uploaded by

Paul Ante
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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TABLE 6.

1 : SUMMARY OF PROS AND CONS OF VARIOUS FORMS OF BUSINESS ORGANIZATION AS TO


OWNERSHIP
PROPRIETORSHIP PARTNERSHIP CORPORATION
Advantages :
1. Simplicity in creation. 1. Ease of establishment. 1. Limited liability of stockholders.
2. Low cost to establish. 2. Division of profits based on partner- 2. Ability to attract larger amounts of
ship agreement. capital.
3. Owner receives all profits. 3. Larger pool of capital than proprie- 3. Ability to have perpetual life.
torship.
4. Owner retains all decision-making 4. Larger pool of talent than 4. Ease of transfer of ownership.
authority. proprietor-
ship .
5. No special legal restrictions. 5. Ability to attract limited partners. 5. Larger pool of skills, talents, and
knowledge.
6. Little government regulations. 6. Potential for economies of scale
operations.
7. Flexibility
8. Business income taxed as indivi-
dual income.
Disadvantages :
1. Unlimited personal liability 1. Unlimited liability of general part- 1.Cost and time involved incorporation
ners. process.
2. Limited skills and capabilities. 2. Limited capability for capital accu- 2. Subject to corporate taxes.
mulation.
3. Limited access to capital. 3. Difficulty in disposing of partnership 3. Potential for diminished managerial
interests without dissolving partner- incentives.
ship.
4. Lack of continuity of the business. 4. Lack of continuity. 4. Legal restrictions and regulatory red
tape.
5. Potential for personal and authority 5. Potential loss of control by foun-
conflicts. der(s) of the corporation.
6. Partners are bound by law of agen-

10
cy.

20

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