Unit-3 Business Ownership Types of Business

Transcript:Unit-3 Business Ownership Types of Business:
Unit-3 Business Ownership Types of Business Ownership 1) Sole Proprietorship Almost every business start as Sole Proprietorship owing to the convenience of business transactions and the relatively small nature of the business. The ownership of the firm lies with a single person, usually who is the whole and sole of the business decision making authority. The proprietors are the ones who usually own the assets of the business and profits generated by them entirely. The downside of it is they also have to take responsibilities of liabilities and debts if any. In the eyes of the public, the proprietor and business are one. The advantage of these types of business ownership is that the businesses are easy to set up under one authority. 1) Sole Proprietorship The proprietors are in complete control of all the decision-making process which makes it easier for public and other stakeholders while dealing with the company. The owners of sole proprietorship receive all the profits of the business which they can reinvest or retain for own use. In the case of the worst-case scenario, the business is easy to liquidate since the authority lies with a single person and reduces multiple decision makings thereby reducing time. 2) General Partnerships Unlike Sole proprietorship, general partnerships involve two or more people as owners of the business. These people are termed as business partners and a legal agreement is made between the partners regarding the legalities of the business including the business aspects, profit division, work and duty division including way out if either or both partners would want to end the partnership and the settlements after that. It is a well-known fact that every partnership ends at some point in time or at the time of crisis if well-outlined processes are not defined. This is classified as one of the successful types of business ownerships if everything works out well. 2) General Partnerships The advantages of General partnership are they are relatively easy to initiate except for the fact that a lot of time has to be invested in developing a partnership agreement. Since all the owners contribute funds for the business, the capital for the business increases substantially. Since diverse people are involved in ownership, it utilizes their talent and skills set to develop various aspects of the business. There are two types of partners which can be present in Partnership business Active Partner – one