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Homework answers / question archive / Using the following criteria, specify the legal form of business that is favored: a) organization requirements and costs b) liability of the owner c) the continuity of the business d) the transferability of ownership e) management control and regulations f) the ability to raise capital g) income taxes BUT in addition to telling me which form of business organization is favored for each, provide a short explanation justifying your choice
Using the following criteria, specify the legal form of business that is favored:
a) organization requirements and costs
b) liability of the owner
c) the continuity of the business
d) the transferability of ownership
e) management control and regulations
f) the ability to raise capital
g) income taxes
BUT in addition to telling me which form of business organization is favored for each, provide a short explanation justifying your choice. Your choices should be limited to sole proprietorship, general partnership or corporation.
a) organization requirements and costs - Sole proprietorship is favored because it is a simple structure and hence no additional legal costs and other costs.
b) liability of the owner - Corporation as corporation provides limited liability to the owners. Losses cannot be recouped from personal assets of the owners.
c) the continuity of the business - Corporation as the business operates as an entity and owners can be replaced easily.
d) the transfer-ability of ownership - Again Corporation as the corporation is legally separate from the owners. Ownership is transferable.
e) management control and regulations - Sole proprietorship because of simple structure and sole ownership.
f) the ability to raise capital - Corporation as they are allowed many types of financing.
g) income taxes - Partnership as the business does not have to pay taxes. The partners have to pay taxes on the income from business.
