Forms Of Organization In Business Essay Research

Paper

There are three main forms of organization in business: sole proprietorships, partnerships and corporations. Now according to the text, a vast majority of businesses are sole proprietorships in this country. However, the bulk of the sales are found in corporations. With this in mind, I believe that a corporation is the way to go. I think that the advantages far outweigh the disadvantages, especially in the long run. In the following paragraphs I will list the advantages and will describe why I feel the way I do.

The first major advantage that a corporation has is unlimited life. My mindset has never been for the short term. Whatever I accomplish financially during my lifetime, I want to live on for a long period of time so others (namely my family) may benefit as well. The major benefit of a corporation’s unlimited life is that after the original owners and managers are gone, the business will still flourish. This way, I could pass the corporation down through generations by way of family or trusted friends.

The second is the easy transferability of ownership interest. Shares of stock are more easily transferred than can proprietorship or partnership interests. Ownership interests can easily be divided into shares of stock, but for proprietorships and partnerships it’s not as easy. This way ownership can be switched with the changing of the guard.

The third advantage is the limited liability that is associated with corporations. Any losses that may be experienced along the way will be limited to the actual funds invested. This protects the investors from being accountable for an amount more than he/she invested in the company. So even if the company plummets the only thing one would have to worry about would be losing the investment, and not any more than that.

There are, however, disadvantages to a corporation. Corporate earnings may be subject to double taxation, which does not apply to a proprietorship or a partnership. Also, starting up your own corporation is much more complex and time-consuming than the other two. A corporation requires a charter and a set of bylaws where the others do not.

In conclusion, after reviewing the advantages and disadvantages of the corporation lifestyle, I think that corporations beat out the others. With all things considered, a corporation is the obvious long-term choice, and that fits me the best. Although a corporation would take a lot more to start up, as far as paperwork and capital, I think that it’s worth it for the benefits of the long run.