How does nature of business affect choice of form of ownership?
Answers
Answer:
Nature of business activity: This is an important factor having a direct bearing on the choice of a form of ownership. In small trading businesses, professions, and personal service trades, sole-proprietorship is predominant.
Explanation:
Nature of Business:
The nature of business is also considered while selecting a suitable form of business organisation. Sole proprietorship is preferred if direct personal contact is needed with the customers. ... However, in case of large manufacturing units, company form of organisation may be adopted.
The following are some of the important factors business owners should consider when selecting a form of ownership.
- Cost of Start-up. ...
- Control vs. ...
- Profits—to Share or Not to Share. ...
- Taxation. ...
- Entrepreneurial Ability. ...
- Risk Tolerance. ...
- Financing. ...
- Continuity and Transferability.
Among the first decisions a business owner or practicing professional must make is the best business entity for their organization. This is a crucial decision when starting business because it has far-reaching legal and tax consequences.
What are the 4 forms of business ownership?
4 Types of Legal Structures for Business:
- Sole Proprietorship.
- General Partnership.
- Limited Liability Company (LLC)
- Corporations (C-Corp and S-Corp)