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Akshay - Types of Business OrganiZations
Akshay - Types of Business OrganiZations
BUSINESS
ORANIZATIO
NS
Presented by,
Harinarthini Akshay
21951A2104
Aero-3A
subject- Befa
THE FIVE FORMS OF BUSINESS
ORGANIZATIONS INCLUDE THE
FOLLOWING
Partnership
Corporation
Sole proprietorship
Cooperative
PROS CONS
PROS CONS
PROS CONS
• Total control of the business: As the sole owner of Unlimited liability: You are personally
your business, you have full control of business responsible for all business debts and company
decisions and spending habits. actions under this business structure.
• No public disclosure required: Sole proprietorships
Lack of structure: Since you are not required
are not required to file annual reports or other
financial statements with the state or federal to keep financial statements, there is a risk of
government. becoming too relaxed when managing your
money.
• Easy tax reporting: Owners don't need to file any
special tax forms with the IRS other than the Difficulty in raising funds: Investors typically
Schedule C (Profit or Loss from Business) form. favour corporations when lending money
• Low start-up costs: While you may need to register because they know that those businesses have
your business and obtain a business occupancy strong financial records and other forms of
permit in some places, the costs of maintaining a sole security.
proprietorship are much less than other business
structures.
COOPERAT
IVE
A cooperative, or a co-op, is a private business, organization or
farm that a group of individuals owns and runs to meet a common
goal. These owners work together to operate the business, and
they share the profits and other benefits. Most of the time, the
members or part-owners of the cooperative also work for the
business and use its services.
COOPERATIVE
PROS CONS
• Greater funding options: Cooperatives have access Raising capital: Larger investors may choose
to government-sponsored grant programs, like the to invest in other business structures that allow
USDA Rural Development program, depending on them to earn a larger share, as the cooperative
the type of cooperative.
structure treats all investors the same, both
• Democratic structure: Members of a cooperative large and small.
follow the "one member, one vote" philosophy,
meaning that everyone has a say, regardless of their Lack of accountability: Cooperatives are
investment in the co-op. more relaxed in terms of structure, so members
who don't fully participate or contribute to the
• Less disruption: Cooperatives allow members to
business leave others at a disadvantage and risk
join and leave the business without disrupting its
structure or dissolving it. turning other members away.
LIMITED
LIABILITY
COMPANY
This is a new form of business structure and gained its popularity in the short-
term because the owner has limited individual liability for the debts and
actions of the LLC. It had similar features like a partnership such as
administration flexibility and the advantage of passing the taxation. The
proprietor of LLC is known as members as they can include many,
corporations, additional LLC and foreign entities.
LIMITED LIABILITY COMPANY
PROS CONS
• Limited liability: As the name states, owners and Associated costs: The start-up costs associated
managers have limited personal liability for business with an LLC are more expensive than setting
debts, whereas individuals assume full responsibility up a sole proprietorship or partnership, and
in a sole proprietorship or partnership.
there are annual fees involved as well.
• Pass-through taxation: Owners of LLCs may take
Separate records: Owners of LLCs must take
advantage of "pass-through" taxation, which allows
them to avoid LLC and corporation taxes, and owners care to keep their personal and business
pay personal taxes on business profits. expenses separate, including any company
records, whereas sole proprietorships are less
• Flexible management: LLCs lack a formal business
formal.
structure, meaning that their owners are free to make
choices regarding the operation of their businesses. Taxes: In regards to unemployment
compensation, owners may have to pay it
themselves.
THANK
YOU