Sc business organization b
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SC – Business Organization (B). Lim Sei Kee @ cK. Sole proprietorship. A sole proprietorship is a business entity owned by one person who is legally responsible for the debts and taxes of the business. Sole proprietorship. Ownership: 1 owner Life: Ends when owner:

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SC – Business Organization (B)

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Sc business organization b

SC – Business Organization (B)

Lim SeiKee @ cK


Sole proprietorship

Sole proprietorship

A sole proprietorship is a business entity owned by one person who is legally responsible for the debts and taxes of the business


Sole proprietorship1

Sole proprietorship

  • Ownership: 1 owner

  • Life: Ends when owner:

  • Is unable to carry on,

  • Dies, or

  • Closes the firm

    Responsibility for business debts if firm is unable to pay: Owner


Advantages

ADVANTAGES

  • Total control

  • Cheap and easy to start up

  • Keep all the profit

  • Business affairs are private


Disadvantages

DISADVANTAGES

  • Unlimited liability

  • Can be difficult to raise finance

  • Can be difficult to enjoy economies of scale, i.e. lower costs per unit due to higher levels of production

  • There is a problem of continuity if the sole trader retires or dies


Partnership

Partnership

  • Ownership: 2 or more

  • Life: Ends when partner(s):

  • withdraws,

  • Dies, or

  • Closes the firm

    Responsibility for business debts if firm is unable to pay: Partners individually and jointly


Partners must agree upon

Partners must agree upon:

  • Amount each partner will contribute

  • Percentage of ownership of each partner

  • Share of profits of each partner

  • Duties each partner will perform

  • Debts- the responsibility each partner has for the partnership’s debts


Advantages1

ADVANTAGES

  • Spreads the risk across more people

  • Partner may bring money and resources to the business (e.g. better premises to work from)

  • Partner may bring other skills and ideas to the business

  • Increased credibility with potential customers and suppliers


Disadvantages1

DISADVANTAGES

  • Have to share the profits.

  • Less control of the business for the individual.

  • Disputes over workload.

  • Problems if partners disagree over of direction of business.


Company corporation

Company / Corporation

  • A company / corporation is a publicly or privately owned business entity that is separate from its owners and has a legal right to own property and do business in its own name; stockholders are not responsible for the debts or taxes of the business


Company corporation1

Company / Corporation

  • Ownership: Can be thousands

  • Life: Continues indefinitely; ends when:

    -business goes bankrupt

    -stockholders vote to liquidate

    Responsibility for business debts if firm is unable to pay: Stockholders can lose only the amount invested


Advantages2

ADVANTAGES

  • Limited liability

  • Easier to raise finance

  • Stable form of structure

  • Provides more privacy of information than an public limited company


Disadvantages2

DISADVANTAGES

  • Greater admin costs

  • Public disclosure of company information (annual report & accounts + annual return)

  • Directors’ legal duties (set out by Companies Act)


Cooperatives

Cooperatives

  • The objectives are normally more focused on the members of the co-operative, the local community and the world community. Profit is not the primary objective.


Advantages3

ADVANTAGES

  • Achieve a common purpose.

  • More power to buy or bargain


Disadvantages3

DISADVANTAGES

  • A long, drawn out decision-making process

  • Co-operatives may find it difficult to raise finance

  • Idealistic and ethical aims may not be agreeable with all members

  • The aims held by many co-operatives may not lead to profits in the long run


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