B.E Lesson#2

• Disadvantages of Partnership

  • Business doesn't have independent legal status
  • Partners are personally liable for debts and losses
  • Risk of loss due to incompetence or fraud of other partner
  • No power of succession
• Disadvantages of Sole Proprietorship

  • Personally liable for all debts and actions
  • Lack of financial control
  • Difficulty in raising capital
• Partnership


  Partners co-own the business and share responsibilities in running the organization
• Sole proprietorship


  A business owned by a single individual with full control over finances and operations
• Ways to organize a business

  • Sole proprietorship
  • Partnership
  • Corporation
• Advantages of Sole Proprietorship

  • The tax preparation is faster
  • Lower start-up costs
  • Easier handling of money
  • Subjected to minimal legal requirements
  • Free to decide when to stop the business
  • Free to appoint heirs
• Disadvantages of Corporations

  • Costly to incorporate
  • Income gets taxed twice
  • No power of succession
• Advantages of Corporations

  • Easy to gather capital
  • Taxes separate from owners
  • Transferability of shares
  • More centralized structure for decision-making
  • Exemptions of shareholders from individual liability
• Advantages of Partnership

  • Easy to start either verbally or through writing
  • Easier to gather capital
  • Better decision-making
• Partnership


  Business relationship between two or more people sharing profits and liabilities
• Corporation


  An entity legally recognized as separate and distinct from its owners