Proprietorships the Benefits and Drawbacks Essay

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These elements are important, because they are showing how these kinds of entities are ideal for a group of individuals that will be directly involved in the business. As, they want to maintain operational control; but they want some kind of: division of labor, responsibilities and financial contributions. ("Incorporation") (Hernandez) This is similar to a proprietorship in that it is easy to establish and there are less regulations. However, partnerships are different, because there is stated contract that defines the percentage of ownership and liabilities for these kinds of organizations.

Corporations

A corporation is considered to be a separate legal entity. As, these kinds of organizations are: responsible for their own activities, they can take on debt, enter legal agreements, own property and they are also liable for any taxes as a business. This means that the firm will pay taxes on all income that is received. At the same time, these kinds of entities can sell common stock to increase working capital and they can have large number of owners (called the shareholders).

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The major benefits that this kind of organization is offering includes: there are limited liabilities, the personal assets of the owners are protected against legal claims and these types of firms can generate large amounts of capital. The different drawbacks of these kinds of businesses include: they are time consuming (because of regulations); there are higher costs, more formalities to establish and double taxation for the owners. These elements are important, because they are showing how these types of firms are ideal for companies that want to become very large. ("Incorporation") (Hernandez) This is different from proprietorships and partnerships, because there are more regulations that must be followed. As the owners will have greater legal protections, while having to go through formalized procedures to: establish and maintain these kinds of firms......

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