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Form of Organization

A sole proprietorship is a type of business owned and operated by one individual with no legal distinction between the owner and the business. A sole trader can employ other people but is solely responsible for all business decisions and debts. They have unlimited personal liability for the business but can invest their own capital flexibly.

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16 views

Form of Organization

A sole proprietorship is a type of business owned and operated by one individual with no legal distinction between the owner and the business. A sole trader can employ other people but is solely responsible for all business decisions and debts. They have unlimited personal liability for the business but can invest their own capital flexibly.

Uploaded by

wyxxyzhll
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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Also known as a sole tradership, individual entrepreneurship or proprietorship, is a type of enterprise

owned and run by one person and in which there is no legal distinction between the owner and the
business entity. A sole trader does not necessarily work alone and may employ other people.

 Becoming a sole trader is relatively simple compared to other business structures.


 Sole traders make all operational decisions and are solely responsible for raising business
finance.
 They can invest their own capital into the business

 The sole proprietorship lacks a clear distinction between personal and business income.
 The business owner is personally liable for income tax and National Insurance contributions due
on the business profits in each tax year.
 They are also personally liable for any debts the business incurs.
 This can limit their personal liability, and business lenders may be more inclined to co-operate
with a limited company.

An arrangement where parties, known as business partners, agree to cooperate to advance their mutual
interests. The partners in a partnership may be individuals, businesses, interest-based organizations,
schools, governments or combinations.

Partnership recognized by a government body may enjoy special benefits from taxation policy. Domestic
partnerships recognized by governments typically enjoy tax benefits, as well.

General partnership, in which all partners manage the business and are personally liablefor its debts,
developed under common law.

The limited partnership (LP), is a partnership in which general partners manage the partnership's
operations, and limited partners forego the right to manage the business in exchange for limited liability
for the partnership debts.

More recently, additional forms of partnership have been recognized:

• limited liability partnership (LLP): a form of partnership in which all partners may have some degree of
limited liability.

• limited liability limited partnership (LLLP): a form of limited partnership in which general partners have
limited liability for the debts and obligations of the limited partnership.
An organization-usually a group of people or a company- authorized by the state to act as a single entity
and recognized as such in law for certain purposes

Corporations come in many different types but are usualy divided by the law of the jurisdiction where
they are chartered based on two aspects: whether they can issue stock, or whether they are formed to
make a profit.

Depending on the number of owners, a corporation can be classified as aggregate (the subject of this
article) or sole (a legal entity consisting of a single incorporated office occupied by a single natural
person).

Where local law distinguishes corporations by their ability to issue stock, corporations allowed to do so
are referred to as stock corporations, one type of investment in the corporation is through stock, and
owners of stock are referred to as stockholders or shareholders, Corporations not allowed to issue stock
are referred to as non- stock corporations.

A corporation is, at least in theory, owned and controlled by its members. In a joint-stock company the
members are known as shareholders, and each of their shares in the ownership, control, and profits of
the corporation is determined by the portion of shares in the company that they own.

The day-to-day activities of a corporation are typically controlled by individuals appointed by the
members. In some cases, this will be a single individual but more commonly corporations are controlled
by a committee or by committees.

Broadly speaking, there are two kinds of committee structure.

• A single committee known as a board of directors is the method favored in most common law
countries.

• A two-tiered committee structure with a supervisory board and a managing board is common in civil
law countries

Historically, corporations were created by a charter granted by the government. Today, corporations are
usually registered with the state, province, or national government and regulated by the laws enacted
by that government. Registration is the main prerequisite to the corporation's assumption of limited
liability. The law sometimes requires the corporation to designate its principal address, as well as a
registered agent.

In theory, a corporation can not own its own stock. An exception is treasury stock, where the company
essentially buys back stock from its shareholders, which reduces its outstanding shares. This essentially
becomes the equivalent of unissued capital, where it is not classified as an asset on the balance sheet
(passive capital).

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