Organizational Forms

Organizational Forms

Sole Proprietorship

Sole Proprietorship is a business owned by one person. Sole proprietor owner at the same time serves as a manager. He has unlimited financial liability. In addition, it has low capital - in the shortcomings of individual entrepreneurship. Its advantages: each owner owns the whole profit, he can make any changes. Individual businessman, as it is not a legal entity, so the owner only pays income tax. It is exempt from tax set for corporations. This is the most common form of business, typical of small shops, service businesses, farms, and professional activities of lawyers, etc. Partnership, or partnership, is a business owned by two or more people. The partnership is also not a legal entity, so the partners are liable only to income tax and have unlimited liability for all debts of the firm (Daft & Lewin, 2003).

Advantages

It's a business suitable for the operation of companies in size very reduced.

This is the least formalities required by its constitution, not being forced to enroll in the commercial register.

Can be cheaper because they do not need to create legal personality of the employer.

No required minimum initial capital.

It manages the company personally.

You pay tax on income tax, according to their earnings.

Disadvantages

Excessive fund raising is not possible for expansions.

The liability is not limited and the owner may have to sell his private property to cover losses.

Profits are far less than that of partnership and joint venture concerns (Cable, 2008).

General partnership

General partnership is the personal trading company, which is established under its own name and not another commercial company. General partnership has no legal personality. Each partner is liable for the obligations of the company all its assets without limitation, jointly and severally with other partners and the company. A creditor of a general partnership may result in the execution of shareholder wealth only when the execution of the company's assets proves to be ineffective. Although a partnership does not have legal personality, it may acquire rights and incur obligations, sue and be sued under its own name. General partnership shall be entered in the register of companies in the Commercial Register. This entry is mandatory.

General partnership is formed as a result of an agreement between partners, which may be natural persons and legal persons. General partnership agreement should be made in writing to be valid. Changing the general partnership agreement requires the consent of all shareholders, unless the contract contains other provisions (Li, 2008).

A general partnership company shall contain the names of all shareholders or the name or the name of one or more partners and additional designation “registered partnership”. The property is a public company, any property contributed by the partners as a contribution and property acquired by the company during its existence. If the association does not specify otherwise, each partner participates equally in the profits and losses of the company. The right to represent the company towards third parties is granted to each partner. However, in the company, some of the ...