Forms of Business Organizations

Answer: • Sole proprietorship: A sole proprietorship is a business owned by one person. The owner may operate on his or her own or may employ others. The owner of the business has total and unlimited personal liability of the debts incurred by the business. • Partnership: A partnership is a form of business in which two or more people operate for the common goal of making profit. Each partner has total and unlimited personal liability of the debts incurred by the partnership. There are three typical classifications of partnerships: general partnerships, limited partnerships, and limited liability partnerships. • Corporation: A business corporation is a for-profit, limited liability entity that has a separate legal personality from its members. A corporation is owned by multiple shareholders and is overseen by a board of directors, which hires the business's managerial staff. • Cooperative: Often referred to as a "co-op business" or "co-op", a cooperative is a for-profit, limited liability entity that differs from a corporation in that it has members, as opposed to shareholders, who share decision-making authority. Cooperatives are typically classified as either consumer cooperatives or worker cooperatives. Cooperatives are fundamental to the ideology of economic democracy.

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The three main categories of business organization are the sole proprietorship, the partnership and the limited liability forms. Among the latter two of these, several different forms exist. Other possibilities include the unincorporated association and the nonprofit corporation. 1. Sole Proprietorships o A sole proprietorship is a one-man business. The owner is liable for all of the company's debts. Furthermore, the company's income is considered to be the owner's personal income and must be reported on the owner's individual income tax return. The advantage of