(1pt) Compare and contrast the three primary forms of business organization. How
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Question
(1pt) Compare and contrast the three primary forms of business organization. How do a limited liability company (LLC) and S-Corp differ from a traditional corporation? 2. 3. (Ipt) What is the primary goal of a finanial manager? How does this goal differ between businesses with and without stock? (1pt) Who owns a corporation? Describe the process whereby the owner controls the firm's management. What is an agency problem? Give an example of an agency problem ina corporation. 4. 5. (1pt) Compare and contrast auction and dealer markets.Explanation / Answer
QUESTION 2:
The three forms of business organization are sole proprietorship, partnership and a corporation
1. Sole proprietorship
Advantages: Easy to start, you can have full control of the business and all rights to the profits
Disadvantages: Unlimited liabilities on debt, solely responsible to conduct of business, difficult to get initial capital
2. Partnership
Advantages: Easy to form, the partners can take joint decision; can get a different perspective from that of yours, you can share your losses
Disadvantages: Unlimited liability on debt from both partners, potential conflict of interest between partners and lacks the longevity to business.
3. Corporation:
Advantages: A corporation is "going concern" which has unlimited life, there is limited liability of debt, separation from ownership and management
Disadvantages: More expensive due to higher taxes, difficult to form due to a lot of government regulations and slower decision making process.
An S-corp. or a limited liability company is a business in which the owners are personally liable to the debt only to the extent of the capital that was raised by them whereas in a traditional corporation there is no personal liability.
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