What Form of Business Organization Works Best?
There are several forms of business organizations. This article looks at the pros and cons of three out of them – Sole Proprietorship, Partnership and Corporation. Sole Proprietorship Sole proprietorship is considered the oldest form of business organization. Since it has such a simple set up, it is among the more preferred forms too. In a sole proprietorship, the entire business is managed by one person, who looks after the operations, and financial and legal aspects. There aren’t many state or federal regulations concerning a sole proprietorship and there are fewer hassles in managing and controlling it. Advantages o Easier to set up o Start-up costs are lower and working capital required is minimal o Less need for paper work o Decision making depends on only one person o Owner gets tax advantages and all the profits Disadvantages o Raising the capital might be difficult o Owner takes on unlimited liability o Business continuity may be affected when the owner is absent Partnership A
