Multimedia Activity Business & Marketing Essay Paper

Different Forms of Business Structures
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Different forms of Business Structures
Amongst the different business structures, I would chose sole proprietorship since it is not only the old but also the most common form of business ownership. It is managed by one person (sole proprietor) and not by a legal entity or person. Therefore, there exists no separate legal entity. It is the simplest form of business ownership since it does not have to be registered or incorporated and is ideal in running of small and medium scale businesses. Firstly, sole proprietorship lacks legal formalities. There exists no separate law that governs it hence, no many regulations and rules that must be followed. Moreover, a license is only required in order to carry out the business of my choice. Similar to its formation, there are no legal processes involved in its closure therefore it is easy to handle. Secondly, the owner has limited liability since there is no separation between the business and the owner. Therefore, in case the business fails to meet its liabilities, the proprietor must pay for them and this means that by use of his or her personal assets such as house or car, should be sold in order to meet the business liabilities.
Thirdly, in terms of risk and profit, the owner bears all the risks since he or she is the only person who has invested the finances in the company. Moreover, in case of business failure, the owner suffers the loss solely. However, the owner enjoys all the profits alone and is not liable to share profits with other stakeholders since there exists none. Fourthly, there is no separate legal identity in sole proprietorship. This means that the owner and the business are the same. The owner should be responsible in undertaking all the transactions and activities in the business. Fifthly, in terms of continuity, in case of retirement, death, insanity, bankruptcy, imprisonment etc., these will have a direct impact on the business and in most cases, it will stop its operations hence the business is closed (Chilver, 2015).
In the sole owner proprietorship, the owner exercises total control of the business hence quick decision making and freedom exists in doing business. Additionally, the sole proprietor is not required by the law to publish the financial accounts and any other documents of such kind to the public hence confidentiality. Moreover, the owner is able to derive maximum incentives from the entity and does not have to share profits. Therefore, the amount of hard work he puts reciprocates to incentives he receives. Being my own boss, there is sense of achievement and satisfaction since I will be answerable to myself hence; it is a great form of self-boosting and creating self-worth. One of the major limitations is unlimited liability. In case of failure, the owner’s property can be wiped out affecting the future prospects. Secondly, the owner has access to limited capital since the only source of capital is personal savings and financial institutions and banks do not lend money easily to proprietorships. Conclusively, there is limitation in managerial ability since the owner cannot be an expert in all business fields; therefore the business is likely to suffer from poor decisions and mismanagement (Chilver, 2015).
Other forms of business structures
Partnership
The business is owned and operated by a number of individuals and the business is structured as a partnership. There are two types of partnerships: limited partnership and general partnership. In general partnership, partners have the obligation of managing the company and assuming all the responsibilit...