Business organization

From legal point of view there are four ways to form a business:

1. Sole Proprietorship
This is generally the simplest way to set up a business. A sole proprietorship is
owned by a single individual who is singly responsible for running the business and is
accountable for all the debts and obligations related to the business.
The sole proprietor enjoys exclusive control and decision-making as well as gets all
the profits earned but he also shoulders all losers and has unlimited liability which
means payment of his loans will extend to his personal assets.

2. Partnership
A partnership is an agreement in which two or more persons combine their
resources in a business with a view to making profit. A partnership agreement is
drawn up and profits are divided among the partners according to the terms of
agreement.
There are two types of partnership:
a. The General partnership – all owners share the management of the business and
each is personally responsible for and must assume the consequences of the
actions of other partners. All general partners have unlimited liability which
means loan payment will extend to their personal property.
b. The Limited partnership. Some members are general partners who control and
manage the business and may be entitled to a greater share of the profit while
other partners are limited and contribute only capital take no part in control or
management, and are liable for debts to a specific extent only.
3. Corporation
A corporation is a legal entity that is separate from its owner, the shareholders. No
shareholders is personally liable for the debt, obligations or acts of the corporation.
Directors and officers can bear liability for their involvement with the corporation.
The legal entry of the corporations gives it an individual identity of its own.
Corporations normally can exist for a life of 50 years, owners have limited liabilities
however corporations are burdened by heavy taxes.

4. Cooperative
A cooperative is an entity organized by people with similar needs to provide
themselves with goods or services or to jointly use available resources to improve
their income.

Cooperative members have equal say in decision making with one vote per member
regardless of number of shares held, there is open and voluntary membership and
surplus earning is returned to the members according to the amount of their
patronage.

 The size and outlook of the industry, what trends can be identified?
 Description of the product
 The buyers have to be identified. Who are your target costumers?
 The regulatory environment. Are their local, national laws that will restrict
the business? One needs to identify government regulations specific to the
chosen industry.
 The need to identify the leading businesses in the industry, and to provide
company information on the most successful businesses that you will end
up against.
 Factors that will affect the growth of the business.