Answer:
There are three legal forms of business organization that are sole proprietorship, society and corporation.
Explanation:
<u>Sole proprietorship:</u> A company that has only one person and works for its own benefit. In almost all the world there are a large number of sole proprietorships which are usually small companies, the most common being for example a personal teacher, a bicycle workshop, etc.
Advantage:
- The owner receives all profits and profits.
- Independence
Disadvantages:
- There is unlimited liability so that all income can be used to pay debts.
- The owner performs several activities.
<u>Company</u>: company that has two or more people. In general, partnership companies are larger than sole proprietorships. The most common companies in society are finance and insurance.
Advantage:
- Raises more funds than sole proprietorship.
- Greater intelligence and administrative ability.
Disadvantages:
- The company dissolves when a partner dies.
- Difficulty to liquidate or transfer the company.
<u>Corporation</u>: The property (shares) of a corporation are its shareholders. Shareholders have profits by receiving dividends that are distributions of the earnings of the shares.
Advantage:
- They have a limited liability, they don't lose more money than they invested.
- The company has a long life.
Disadvantages:
- Higher organizational costs than in other business forms since they need to hire staff.
- Subject to greater government regulation.
