PROPRIETORSHIP

Business or property owned by single person is known as proprietorship. In

proprietorship all the business is owned by single person.
ADVANTAGES:
Following are the important advantages of proprietorship.
I. As proprietorship are them small business and are easy to start. A
small amount of money is required to start the business.
II. All the profit belongs to single person because there is only single
person are owner of the business.
III. Only one person has control on whole business every decision is
made by single person.
IV. Proprietorship have a tax advantage. According to the policy the
proprietorship does not have to pay separate tax on business.
V. Proprietorship does not require to submit annual reports or any
documents with the state or public.
DISADVANTAGES:
Following are the important disadvantages of proprietorship.
i. As all profit belongs to single person so all the losses are beard by
single person.
ii. Liabilities of the proprietorship are unlimited because there is
only one owner and if loss occurs then there is risk for owner to
lose his personal assets.
iii. In proprietorship it is difficult to raise capital because owner can
invest up to all of his amount in the business so raising capital
from proprietorship is much difficult.
iv. Life of business is equal to the life of owner if owner is died or his
abilities to run business are expired so business also expired.
v. Proprietorship can grow their business up to limited growth after
that they cannot grow their business due non-availability of
resources.
vi. Ownership is difficult to transfer.
 PARTNERSHIP
A business that is owned by two or more persons are known as
partnership.
ADVANTAGES:
Following are the important advantages of partnership.
I. In partnership business is easy to start and small amount of
cost is required to start because total cost is divided by two
partners.
II. The total profit is divided between two owners on the basis
of partnership agreement which is signed between two
partners.
III. In partnership it is easy to raise capital because both
partners invest above then their personals assets so there is
an easy way to raise capital.
IV. Ownership and control are combined. As partnership is
owned by two or more person so decisions are taken by
two persons so better decisions are made by the
combination of both owners.
V. Burden is shared by both owners.
DISADVANTAGES:
Following are the important disadvantages of partnership.
I. The liabilities of both partners are unlimited. Means there is
a lot of risk for both partners to lose their personal assets.
II. There is a lot of risk of disagreement and friction among
partners of the business which results in a failure if
business.
III. If any partners leave then you will value all the partnership
assets this can be costly for you.
IV. Life of business in most cases is equal to the life partners.
V. Each partner is liable for partnership debits in the business
according to their share in the business.
VI. Difficult to transfer ownership.
 CORPORATION
A business organized as a separate legal entity under state corporation law and
having ownership divided into transferable shares of stock is known as
corporation.
ADVANTAGES:
Following are the important advantages of corporation.
I. The liabilities of corporation are limited. The personal assets of the owners
are not affected.
II. In corporation there is an easy way to raise the capital by each owner.
III. Ownership transfer is difficult in this business system.
IV. Life of the business is unlimited. Because ownership is easy to transfer.
V. All the profits and losses are shared among all of the shareholders.
Disadvantages:
Following are the important disadvantages of corporation.
I. It is difficult to start because a lot of money is required to start business.
II. Double taxation is paid in corporation. The tax on business is paid and after
that profit is divided and again personal income tax is paid by the owner
after division of profit.
III. Decision making is difficult due to difference in thinking point of every
owner.
IV. Most sates charge higher annual franchise fee for the corporation.
V. More state and federal rules and regulations are beard by corporation.