Describe the problems which may be faced in establishing a business and also enumerate the factors that seems most influenced in selecting the form of ownership.
Answers
Answer:
The factors which affect the choice of the form of business organisation are given below:
Nature of business:
Size and area of operations:
Degree of control desired:
Amount of capital required:
Degree of risk involved:
Division of surplus:
Duration of business:
Government regulation and control:
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Everyone’s tolerance for risk is different. Some people enjoy the rush of skydiving and rollercoasters, while others prefer to stick to the carousel or keep their feet on the ground. In business, one’s degree of risk tolerance should be compatible with the form of ownership being considered. For example, a forty-five-year old entrepreneur with dependents might seek to protect her accumulated assets (real estate, savings, retirement, etc.) and therefore select a legal structure that carries less personal financial risk. Every prospective business owner must gauge what he or she is willing to risk losing and choose a form of business accordingly.