Economics

Economics There are three basic forms into which U.S. businesses have chosen to organize: proprietorship, partnership, and corporation. 1. A single individual that makes the business decisions, receives all the profits, & is legally responsible for all the debts of the firm owns a proprietorship. a. Advantages: a proprietorship is easy to form and dissolve; all decision-making powers reside with the sole proprietor; a proprietorship is taxed only once. b. Disadvantages: the proprietorship faces unlimited liability for debts of the firm & has limited ability to raise funds; the business normally ceases to exist with the death of the proprietor. 2. Two or more who share profits or losses owns a partnership. a. Advantages: partnerships are easy to form, experience relatively low costs of monitoring job performance, permit more specialization than sole proprietorships, & are only taxed once. b. Disadvantages: partnerships face unlimited liability & more difficulty in decision-making (relative proprietorship); dissolution of the partnership is usually necessary when a partner dies or leaves the partnership. 3. A corporation is a legal entity that may conduct business in its own name, just as an individual does. The owners of the corporation are its stockholders. a. Advantages: shareholders enjoy limited liability; a corporation continues to exist even if some owners cease to remain owners; a corporation has financial, borrowers, stock, information, proprietorship, corporation, exists, business, trading, problem, price, partnership, owners, own, online, markets, market, firm, exist, control, asymmetric, trade, securities, savers, reduce, rate, profits, place, ownership, moral, located, liability, lenders, interest, hazard