Agency and business organizations Assignment Example | Topics and Well Written Essays - 1250 words

Agency and business organizations - Assignment Example The type of a business organization determines how it is operated and managed. The different types of business ventures have different structures and are differently managed. The laws that govern their operations also have some little differences. Examples of business organizations include: sole proprietorships, franchises, partnerships, limited liability partnership, limited liability companies, joint venture, syndicate, joint stock companies, business trusts, cooperatives and corporations. Sole proprietorship A sole proprieto0rship is a form of business entity that is formed and managed by one person. This business has the advantage of simplicity information, as it does not require long formation procedures. The owner also has the advantage of enjoying all the profits and faster decision making. Moreover, sole proprietorship businesses also have the advantage of tax simplicity and the owner will not be required to make complex tax return to the authorities (Bouchoux, 2007). Despite the advantages, sole proprietorship business also suffers from several drawbacks. First, this form of business entity faces challenges in acquisition of capital for its projects. The major drawback of this business however is the fact that the owner has unlimited liability on the losses and risk of the business. The owner and the business is the same entity and therefore losses and risks of the business are completely borne by the sole owner. In addition, sole proprietors businesses face management problems, as the owner has to work for many hours and sometimes lack the skills required in managing the business (Bouchoux, 2007). ... Partnership businesses have the advantage of easy procedures in formation, combined skills, and efforts, ease of raising more funds from the partners and the moral support from the members in the partnership. The partners can therefore share the risk and losses that might arise from the operation. The various limitation of partnership business include: long procedures in making decisions as all the partners have to be consulted, partners are also individually responsible for the actions of other partners. Moreover, partnership business involves the sharing of profits, unlimited liability on the partners and limited lifespan (Markman & Lesonsky, 2010). The death or disagreements can always result into the dissolution of the business. Limited liability partnership LLP is a form of business organization that has the characteristics of both a partnership and a limited liability company. In LLP, the partners’ liability is limited and the partners are not liable for the action of ot her partners. The partnership will remain liable on its assets and the LLP is considered a different entity. This form of business organization has the advantage of limited liability on the partners and the flexibility in operation just like in the general partnership. LLP the disadvantage of difficulty in the formation and in the filing of returns. This makes the business be complex to manage and operate. The government might also closely monitor the operation of the partnership. Limited liability Company This is a form of business organization in which the owners have limited liability and blends the characteristics of both partnerships and corporate structures. The business is a separate legal entity and the members’ liability is limited to the proportion of the unpaid shares.