Advantages and Disadvantages of Major Types of Business Organisation – Flashcards

owner receives all profits low organisational costs income taxes as personal income or proprietor independence secrecy ease of dissolution

More expertise and managerial skill available relatively low organisational costs income taxed as personal income of partners fundraising ability is enhanced by more owners

Limited Liability protects owners from losing more than they invest Can achieve large size due to marketability of stock Receives certain tax advantages Greater access to financial resources allows growth Cann attract employees with specialised skills ownership is readily transferable long life of firm

Owner receives all losses Owner has unlimited liability; total wealth can be taken to satisfy business debts Limited funraising ability can inhibit growth PP may have limited skills and management expertise few long range oppurtunities lack continuity when owner dies

Owners have unlimited liability; may have to cover debts of other, less financially sound partners Dissolves or must reorganize when partner dies difficult to liquidate or terminate Potential for conflicts between partners Difficult to achieve large scale operations

Double taxation because both coperate profits and dividends paid to owners are taxed, although the dividents are taxed at a reduced rate More expensive and complex to form Subject to more government regulation Financial reporting requirements make operations public