Legal Forms of Business

There different legal forms of business. Before you start your business it is necessary for you to choose best legal form for your business.

Here are types some types of legal form of business:

- Sole proprietorship

- Partnership

- Limited liability company

- Corporation

These are all best, there is no wrong or right in these legal forms of business. It depends on your own resources that what you choose according to your sources. If you want to start business alone then the sole proprietorship is best for you. It is relatively simple and inexpensive to establish.

Here are advantages of this type of legal form:

- It has easy Formation due to single person

- Unlimited Liability

- Single ownership

- Profit is only for owner

- Management is also the responsibility of the single owner

- Easy Dissolution: owner can easily dissolve the business

Partnership:

Partnership means a lawful business owned by two or more persons. The profit of the business shared by the partners in agreed ratio.

- It has legal entity, it is contractual agreement between parties

- Profit and Loss Distribution equally to all partners

- Unlimited Liability

- Transfer of Rights can also be possible in this forms

- All partners are responsible for management

LLC(limited liability company)

A company is an integrated association of persons formed usually for the pursuit of some commercial purposes.

- Creation of Law

- Separate Legal Entity

- Limited Liability

- Transferability of shares

- Number of Members

- Common Seal

Cooperative Societies

Cooperation is an action of persons voluntarily united for utilizing reciprocally their own forces, resources or both under mutual management for their common profit or loss.

- Easy formation

- It provides protection of Mutual Interest

- It has limited Liability

- Equal Distribution of Wealth, because of the legal document in which all shares of partners are written

- Every partner has equal rights

Combination

Combination is the association, temporary or permanent, of two or more firms.

- Economy in production: efferent production

- Effective management: more people work, so more effective management

- Division of labor: work is divided among partners

- vicious competition.


By James Kahn