Your Business Structure and Corporate Business Structures - Essay Example

Business Structure and Corporate Business Structure Affiliation Business or organization structure is a form of a company entity. It is the form of company entrepreneurs decides to keep their businesses. The form of business is determined by the income tax that the business organization has to file. (Welsh, 2000)This paper will explain different business structure as they are outlined in the videos “Your Business Structure” and “Cooperate Business Structure”. The paper will go further and give the advantages and disadvantages of the explained business structures.

Business StructuresSole ProprietorshipThis is the basic form of business. It involves only one person running the business. The decisions made are made the sole persons. (Resnicoff, 2006) The owner of the business may hire staffs to manage the business on his/her behalf. Sole proprietorship is the most available business.AdvantagesThe first advantage of sole proprietorship is that is simple to form. It does not require a lot of formalities to form it. One can start it any time without following or filling legal formalities.

The second advantage is that it is simple to manage. The owner of the business may find it easy to manage the business on his own. This reduces complications and follow-ups. It is also easy for a sole proprietorship to be sold or passed from one generation to the other. (Resnicoff, 2006)Thirdly, sole proprietorship has the tax advantage. A tax imposed on the sole proprietorship is based on the personal income. This means that the tax liability is less as compared to other forms of business. It is also easy to terminate the business.

The owner of the business can terminate the business at his will. No legal formalities are required to end the business. (Resnicoff, 2006)DisadvantagesOne of the setbacks of sole proprietorship is that it is difficult to raise money. Financing institutions and banks are reluctant to fund a sole proprietor. It is also difficult for a person to get the fund from the government institution. Secondly, this kind of business puts the money of the proprietor into high risk. The owner risks his/her money solely, and the loss strikes him as the sole.

(Westkämper, 1999)PartnershipThis is a form whereby the two or more people with a common goal get into an agreement to run a business. The persons contribute money, and the profit is shared according to the agreed ratio or the contribution ratio. (Welsh, 2000)This form of business has several advantages. One of them is that it is easy for the partners to raise capital. Through their contribution, the partners can raise a lot of money easily. With partnership, taxes are not on the whole partnership but to the individual partners income.

This makes the partnership have a tax advantage. The third advantage is, with different partners involved in the management, there is varying decision from the different partners. This makes it easier to tackle a problem that in the sole proprietorship. Losses of the business are shared among the owners. This means that no one partner is liable for the losses made by the business. However, the partnership is difficult to start. It requires a lot of legal formalities to start a partnership. The business must be registered with the ministry.

In additional, the partnership is difficult to management and solves conflict. There may emergence of conflicts between the partners. Furthermore, the partnership is more disadvantageous in term of dissolution. When the partners want to terminate their partnership, there are legal formalities that should be followed. CooperationThis is a legal independent entity that is legally formed. It is totally separate from the owners. This form of business has its advantages in that the person persons in the cooperation do not risk his money fully.

(Welsh, 2000) The cooperation’s debts are separate from the owners’ debt. This is advantageous to the owners. In addition to that, the owners of the cooperation evade tax as they can save money in the cooperation and not tax. The form of business is also rigid and stable. Due to legal formalities and legal documentation required, cooperation remains stable.Cooperation has its advantages. One is that they are difficult to start. This is due to so many legal formalities required. The other thing is that if a conflict arises, the management is unable to solve it easily.

The rigidity of the cooperation makes it more difficult to solve problems. Another disadvantage is, the cooperation is hard to terminate. If need be to terminate the business, there must be some legal formalities followed.CompanyA company is a legal person capable of holding assets, conduct business, sue or be sued. It is owned by shareholders and managed by directors appointed by the shareholders. (Corwin, 1979)Some of the advantages of this form of business are that, the shareholders are limited to liabilities of tax and losses of the company.

The company can raise high amount of money easily. It is also easy to sell or pass ownership of the company. However, companies are faced with the challenge of set-up cost and cost of maintenance. The owners have limited control of the company, and complex legal requirements as the company must report its activities publically. (Corwin, 1979)ReferencesAaronson, S. A. (2011). Limited partnership: Business, government, civil society, and the public in the Extractive Industries Transparency Initiative (EITI).

Public Administration and Development, 31(1), 50-63Broyde, M. J., & Resnicoff, S. H. (1996). Jewish Law and Modern Business Structures: The Corporate Paradigm. Wayne L. Rev., 43, 1685.Balve, P., Wiendahl, H. H., & Westkämper, E. (2001). Order management in transformable business structures—basics and concepts. Robotics and Computer-Integrated Manufacturing, 17(6), 461-468.Chamoni, P., & Stock, S. (1999). Temporal structures in data warehousing. In DataWarehousing and Knowledge Discovery (pp. 353-358). Springer Berlin Heidelberg.Corwin, H. D. (1959). Comanche & Kiowa Captives in Oklahoma & Texas.

Cooperative Publishing Company.Gutek, B. A., & Welsh, T. M. (2000). The brave new service strategy: Aligning customer relationships, market strategies, and business structures. New York: Amacom.