The formes of business ownership

THE FORMES OF BUSINESS OWNERSHIP

A business is any organization that seeka prpfit by providing goods and services to the economic system. A nonprofit organization also provades goods and services to the economuc system, but doesn't have profit as an objective.

Business takes different forms. The three major forms of business are the sole proprietorship, the partnership, and the corporation. A sole proprietorship is a business that is owned by one person. In essence, the owner and the business are one. All business profits become the property of the owner and all business debts are the responsibility of the owner. Sole proprietorship is the simplest form of business to enter, to control, and to leave.

A partnership ia an association of two or more individuals who act as co-owners of a business for profit. Like sole proprietors, general partners are responsible for running the business and for all business debts. Limited partners receive a share of the profit in return for investing in the business. However, they are not responsible for business debts beyond the amount they have invested. A pertnership agreement (or articles of partnership) is a written document setting forth the terms of a partnership.

Corporation are artificial beings created by law. These beings have the right to start and operate a business, to own property, and to enter into contracts.

Shareholders of ownership of a corporation are called stocks and owners are called stockholders. A corporation must be chartered, or formally recognized. Once the corporation has received a charter, its original stockholders elect a board of directors. The board of directors then elects or appoints corporate officers.

Perhaps the major advantege of the corporate form is limited liability. Stockholders are not liable for the corporation's debts beyond the amount they have paid for its stocks.Another important advantage is the perpetual life of the corporation. A major disadvantage is double taxation.

The stocj of open corporation is avaible to anyone who wants to buy it, the stock of close corporations is not. Non-for-profit corporations are formed to provide social services rather than to earn profit, but they are not owned by governments.

Three additional forms of business ownership are the cooperative, the joint venture, and the syndicate.

A cooperative is an association or individuals or firms for the purpose of performings some business functions for all its members. Members benefit from the activities of the cooperative, because it can perform its function more effectively than any member could by acting alone.

A joint venture is a partnership that is formed to achieve a specific goal or to operate for a specific period of time. Once the goal is reached or the period of time elapses, the partnership is dissolved.

A syndicate is a temporary association of individuals or firms, organized to perform a specific task that requires of large amount of capital.

Дата добавления: 2015-11-04