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Alternative Forms of Business Organization - Coggle Diagram
Alternative Forms of
Business Organization
Proprietorship unincorporated business owned by
one individual
Advantages
Easy and inexpensive to form
Subject to few government regulations
Taxed like an individual
Disadvantages
Proprietor has unlimited liability for business debts
Life of proprietorship is limited to time the creator owns it
Transferring ownership can be difficult
Difficult for proprietorship to obtain large sums of capital
Partnership unincorporated business owned by
two or more persons
Advantages
Taxed like an individual
Subject to few government regulations
Easy and inexpensive to form
Disadvantages
Proprietor has unlimited liability for business debts
• Life of partnership is limited to time the same group of partners owns it
• Transferring ownership can be difficult
• Difficult for partnership to obtain large sums of capital (but better than for a proprietorship)
Corporation legal entity created by a state
Advantages
Separate and distinct from its owners
Unlimited life
Easy transferability of ownership
Limited liability
Easier for corporations than for proprietorships and partnerships to raise money in the financial markets
Disadvantages
Setting up and filing state and federal reports is complex
Corporate charter is filed with the state providing information
about the company and directors
Bylaws are for internal management and procedures
Earnings are subject to double taxation