Question

explain the meaning adVantage and disadvantage various forms of business organisation​

Answer 1

Answer:

sole proprietorship,partnership,coorporation

Explanation:

Advantages of a sole proprietorship

Simplest and least expensive form of business to establish and to dissolve.

The owner is making all the decisions and controlling the whole operations.

All profit flows directly to the owner.

It is subject to fewer regulations.

It has tax advantage: any income is declared as the owner’s personal income tax return, therefore there are no corporate income taxes.

Disadvantages of a sole proprietorship

The owner is responsible for all the obligations of the business.

It is difficult to raise capital: it can only use the owner’s personal saving and consumer loans.

2.partnership

Advantages of a partnership

It is relatively easy to form but considerable amount of time should be invested in developing the partnership agreement.

It is easier to raise capital compared to a sole proprietorship as there are more than one investor.

Any income is declared as the partners’ personal income tax returns, therefore there are no corporate income taxes.

Employees may be motivated and attracted to the business by the inventive to become a partner

Disadvantages of a partnership

Partners are jointly responsible for all the obligations of the business.

Partners must make decision together therefore disputes or conflicts may occur. It may eventually lead to dissolving the partnership

3.coorporation

Advantages of a corporation

It can raise additional funds through the sale of stock.

Shareholders can easily transfer the ownership by selling their stock.

Individual owner’ liability is limited to the value of stock they are holding in the corporation.

Disadvantages of a corporation

It is restricted by more regulations, more closely monitored by governmental agencies and are more costly to incorporate than other forms of the organizations.

Profit of the business is taxed by the corporate tax rate. Dividends paid to shareholders are not deductible from corporate income, so this part of income is taxed twice as the shareholders must declare dividends as their personal income and pay personal income taxes too.