List three forms of business organizations. What are the advantages an

List three forms of business organizations. What are the advantages and disadvantages of each?

What will be an ideal response?

 

 

ANSWER

We begin with the most common, the sole proprietorship. This has the advantage of easy start-up and that the owner is his or her “own boss.” However, such firms generally have limited capital, unlimited liability, and ends when the owner dies or dissolves the business.

Partnerships have greater capital potential, but also suffer from unlimited liability and often alack of expertise in at least one or more functional areas of business.

Corporations dominate in the United States due to their ability to raise greater amounts of capital, ease of transition to new owners, and limited liability. They do suffer agency costs and double taxation.

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