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Management and Organization study

Form of Ownership
Sole proprietorship
A sole proprietorship, also known as a sole trader or simply
a proprietorship, is a type of business entity that is owned and run by one
individual and in which there is no legal distinction between the owner and
the business. The owner receives all profts (subject to taxation specifc to
the business and has unlimited responsibility for all losses and debts. !very
asset of the business is owned by the proprietor and all debts of the business
are the proprietor"s. This means that the owner has no less liability than if
they were acting as an individual instead of as a business. #t is a $sole$
proprietorship in contrast with partnerships.
A sole proprietor may use a trade name or business name other than his or
her legal name. #n many jurisdictions there are rules to enable the true
owner of a business name to be ascertained. #n the %nited &tates there is
generally a re'uirement to fle a doing business as statement with the local
authorities. #n the %nited (ingdom the proprietor"s name must be displayed
on business stationery, in business emails and at business premises, and
there are other re'uirements.
A partnership is an arrangement where entities and)or individuals agree to
cooperate to advance their interests. #n the most fre'uent instance, a
partnership is formed between one or more businessesin
which partners (owners co*labor to achieve and share profts or losses.
+artnerships are also fre'uent regardless of and among sectors. ,on*proft
organi-ations, for example, may partner together to increase the likelihood
of each achieving their mission. .overnments may partner with other
governments to achieve their mutual goals, as may religious and political
organi-ations. #n education, accrediting agencies increasingly evaluate
schools by the level and 'uality of their partnerships with other schools and
across sectors. +artnerships also occur at personal levels, such as when two
or more individuals agree to domicile together. +artnerships between
governments, interest*based organi-ations, schools, businesses, and
individuals, or some combination thereof, have always been and remain
+artnerships have widely varying results and can present partners with
special challenges. /evels of give*and*take, areas of responsibility, lines of
authority, and overarching goals of the partnership must all be negotiated.
0hile partnerships stand to amplify mutual interests and success, some are
considered ethically problematic, or at least debatable. 0hen a politician, for
example, partners with a corporation to advance the corporation"s interest in
exchange for some beneft, a con1ict of interest may make the partnership
problematic from the standpoint of the public good. 2eveloped countries
often strongly regulate certain partnerships via anti*trust laws, so as to
inhibit monopolistic practices and foster free market competition.
Among developed countries, business partnerships are often favored
over corporations in taxation policy, since dividend taxes only occur on
profts before they are distributed to the partners. 3owever, depending on
the partnership structure and the jurisdiction in which it operates, owners of
a partnership may be exposed to greater personal liability than they would
as shareholders of a corporation.
A corporation is a formal business association with a publicly
registered charter recogni-ing it as a separate legal entity having its own
privileges, and liabilities distinct from those of its members. There are many
di4erent forms of corporations, most of which are used to conduct business.
5orporations exist as a product of corporate law, and their rules balance the
interests of the management who operate the
corporation, creditors, shareholders, and employees who contribute
An important (but not universal feature of a corporation is limited liability. #f
a corporation fails, shareholders normally only stand to lose their investment,
and employees will lose their jobs, but neither will be further liable for debts
that remain owing to the corporation"s creditors.
2espite not being natural persons, corporations are recogni-ed by the law to
have rights and responsibilities like natural persons ($people$. 5orporations
can exercise human rights against real individuals and the state, and they
are often responsible for human rights violations. 6ust as they are $born$ into
existence through its members obtaining a certifcate of incorporation, they
can $die$ when they are $dissolved$ either by statutory operation, order of
court, or voluntary action on the part of shareholders. #nsolvency may result
in a form of corporate "death", when creditors force the li'uidation and
dissolution of the corporation under court order, but it most often results in a
restructuring of corporate holdings. 5orporations can even be convicted of
criminal o4enses, such as fraudand manslaughter.
Brief background of the Shareholder