Compare and contrast Sole Proprietorships, Partnerships and Corporations by desc

Question

Compare and contrast Sole Proprietorships, Partnerships and Corporations by describing differences in the following areas, a. Ownership b. Financial Disadvantages c. Position in the US Economy Please read ECON Chapter 3, Section 3-3a. In your own words, please list and briefly describe each of the seven roles of government and provide one specific example not listed in the textbook of the United States Federal Government acting in that role. Please read ECON CH 3, Section 3.3e. Compare and contrast the following and offering your opinion on which one of each pair of tax strategies is the most appropriate, a. The "ability to pay" or the "benefits received" taxation principles b. "Progressive" taxes or "regressive" taxes

Explanation / Answer

1.

a.

Ownership:

Sole proprietorship: This is the single ownership business.

Partnership: This is the business of several owners called partners.

Corporation: This is the business of public ownership.

b.

Financial disadvantages:

Sole proprietorship: Arranging finance could be difficult here, since there is only one owner. The owner has to take bank loan or unsecured financing if required.

Partnership: Since there are so many partners, finance could be arranged from them. Arranging finance slightly better than sole proprietorship but arranging huge finance is also difficult here.

Corporation: In this case finance could be arranged from general public. Sometimes it becomes interest-free. But arranging such finance requires huge legal formalities, which could be very difficult to acquire.

c.

Position in the US economy:

Sole proprietorship: There were almost 16 millions proprietorships in the US economy as on 1995. It increases further till now. Such huge volume contributes only 2% on US economy.

Partnership: There were almost 2 millions proprietorships in the US economy as on 1995. It increases further till now. Such volume contributes only 3% on US economy.

Corporation: Most of the contribution comes from corporations, which was around 4 million as on 1995. Corporation contributes (100 – 2 – 3 =) 95% in the US economy.

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