2.Forms of business organizations Sole proprietorship 2)Partnership 3) Corporation 4 Factors related to optimal forms of organization 5) Agency problems in corporation 剥外经价贫多方号 YO年N0事0E0003
2. Forms of business organizations Forms of business organizations 1) Sole proprietorship 2) Partnership 3) Corporation 4) Factors related to optimal forms of organization 5) Agency problems in corporation
1)Sole Proprietorship ●Owned by one person ●Easy formation advantage Unlimited liability disadvantage Difficulty raising funds disadvantage Represent 75 percent of all businesses ● Account for less than 6%of the dollar volume 剥外校份贫多方号 YO年N0事0E0003
1) Sole Proprietorship Sole Proprietorship z Owned by one person z Easy formation advantage z Unlimited liability disadvantage z Difficulty raising funds disadvantage z Represent 75 percent of all businesses z Account for less than 6% of the dollar volume
2)Partnership o Owned by two or more persons Classified as general or limited General Partner Has unlimited liability for all obligations of the business disadvantage Limited Partner Liability limited to the partnership agreement adyantage O Partnership dissolves when a general partner dies or withdraws,a new partner entries. disadvantage 费外橙价多六居 超O年N0l到E事0EO03
2) Partnership Partnership z Owned by two or more persons z Classified as general or limited – General Partner Has unlimited liability for all obligations of the business disadvantage – Limited Partner Liability limited to the partnership agreement advantage z Partnership dissolves when a general partner dies or withdraws, a new partner entries. disadvantage
3)Corporation Legal entity composed of one or more actual individuals or legal entities Limited liability o Flexibility,Easy marketability of shares of ownership All advantages o Permanency o Ability to raise capital 渊外经价货多方是 YO年N0事0E000
3) Corporation Corporation – Legal entity composed of one or more actual individuals or legal entities z Limited liability z Flexibility, Easy marketability of shares of ownership z Permanency z Ability to raise capital All advantages
4)Optimal form of organization influenced by Cost Complexity o Liability ●Continuity Raising capital 。Decision making ●Tax considerations 剥外经价贫多方号 YO年N0事0E0003
4) Optimal form of organization Optimal form of organization influenced by influenced by z Cost z Complexity z Liability z Continuity z Raising capital z Decision making z Tax considerations