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Financial Management Db1

In: Business and Management

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Financial Management
DB #1
Maurice Wynn
There are three major types of organizations. There is the sole proprietorship, which is an organization that is owned by one individual. There is the partnership, which is an organization that is operated by more than one person. There is also a corporation. A corporation is an organization that buys and sells stock and their liability is limited to the amount of their investment. With these three types of organizations, there are some advantages and disadvantages to them (Zaheer, N.D).
The advantages to a sole proprietorship are as follows. They are easy to set up. Decisions are made by one person, since there is only one owner who has control. The income is taxed only once as personal income. One disadvantage is that the owner has unlimited liability for the obligations of the organization. It can also be difficult to raise financial capital for the organization (Zaheer, N.D).
Similar to sole proprietorships, partnerships are easy to set up and the income is only taxed once. With partnerships, you have access to more financial capital than a proprietorship. There is also specialization, more skills will be available. A disadvantage would be that there may be disagreements between partners which can generate a lot of issues when it comes to making decisions. There is also unlimited liability for partners. There may be legal issues when a partner leaves the organization (Zaheer, N.D).
An advantage for a corporation would be that there is a limited liability for the obligation of the firm. You have access to large financial capital by selling stocks and bonds. You can hire and replace personnel whenever necessary. One disadvantage would be that there is a double taxation of the income on the profits of the corporation and the profit which is received as income. Owners also have minimal say in management decisions

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