Business Organizations Essay Example | Topics and Well Written Essays - 500 words

Business Organizations - Essay Example It is known that a creditor who has a claim against a sole proprietor has all rights to receive all his personal and business assets. It is called unlimited liability. The sole proprietor is allowed to run his business under his own name without any other words. Advantages: all profits are received by sole proprietor, relatively low start-up costs and capital, the greatest freedom from regulation, minimal working capital, tax advantages to owner of the business, owner has the direct control over the decision-making process. Disadvantages: unlimited liability, difficulties in raising capital and lack of continuity in sole proprietorship if the owner is absent for a long time. (Lucas 2002) Partnership is an agreement when two or more sides (persons) are going to combine their available resources in one business. Partnership agreement has to be signed with the assistance of lawyers, because in case of dissolution or disagreement the business should protect its shareholders or other partners. According to the agreement terms partners has to share in all the profits. There are two forms of partnerships: general partnership (all partners are personally liable for all debts and obligations) and limited partnership (some members are responsible for debts). (Adelson 2002) Advantages: easy formation, relatively low start-up costs, additional available resources of investments, possible t