The various forms of business organizations
The various forms of business organizations are sole proprietorship, partnership, corporation and Limited Liability Company (Bouchoux, 2018). A sole proprietorship is the simplest and most common form of business organizations. It is owned and managed by one person for his or her benefit. It requires little regulation compared to a partnership. A sole proprietorship has very few requirements for starting when compared to Limited Liability Company. General and limited are two forms of partnership. Limited partnerships need a formal agreement between the partners while a general partnership does not need a formal agreement. Shared resources in partnership offer more capital for the organization. Total profit is shared among partners in a partnership. In partnership, each partner is one hundred per cent responsible for losses and debts, unlike incorporation where debts and losses belong to the organization. Corporations are a form of business for taxation (Bouchoux, 2018). Profits and losses belong to corporation unlike to sole proprietorship where profit and losses belong to the owner. Limited Liability Company provides owners with limited liability while offering some of the income advantages of a partnership. LLC protects the owner’s assets in case a business fails as compared to a partnership where partners lose assets in case a business fails. The type of business structure I chose for my business is the Limited Liability Company. I chose Limited Liability Company because has limited personal liability. Limited personal liability means LLC is separate from owners. Incase LLC has debts then personal assets cannot be taken to pay debts or losses. Limited Liability Company has a tax advantage where it can take ”pass-through” taxation which means it does not pay LLC taxes (Bouchoux, 2018). Instead, the LLC income or expenses pass through to the owners’ tax returns then the owner is responsible for paying personal income tax obtained from profit. Moreover, the Limited Liability Company has management flexibility. Owners of LLC have more choices about the way to make decisions and run it. LLC has a flexible distribution of profit. For example, one person can get more shares than the others who have the same amount of shares because he or she contributes more labour.
There are many ways of maintaining and securing financial stability while owning a business. An entrepreneur should have a written plan otherwise it will be merely a dream (Behl & Nayak, 2018). It should be an outline showing specific objectives, financing, marketing, sales plan, and determination of cash of things need to be done. Also, an entrepreneur should keep his or her ego in check while listening to others. One should inspect what he or she is doing, pushing to greater accomplishments and holding accountable to what is doing. A business person should follow his or her word even when challenges come. Delegating to employees and do not micromanage them is a way to maintain and secure financial stability (Behl& Nayak, 2018). A manager should delegate and inspect work. If an entrepreneur delegate effectively will earn more profit than expected.
References
Bouchoux, D. E. (2018). Fundamentals of business organizations for paralegals. Aspen Publishers.
Behl, A., & Nayak, S. (2018). Maintaining financial stability in times of risk and uncertainty. IGI Global.