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Business organizations can be classified in a variety of ways depending on its size, sector, legal status etc.

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Introduction

Business organizations can be classified in a variety of ways depending on its size, sector, legal status etc. These classifications differ from one firm from another. Legal status has an important bearing on the environment in which the business operates. It is important to have a comprehensive knowledge of the advantages and disadvantages of the several legal forms so that managers and directors can decide which legal form their firm should adopt. The sole trader is the simplest business to develop and has very little legal formalities, obligations or constraints. A sole trader or sole proprietor is one who individually runs business with personal funds. Remaining as a sole trader has many advantages, mainly being that you are able to give a more personal service to your customers and you are able to make changes within your business very quickly due to there is little or no bureaucracy there being only one person to make the final decision. Other advantages include having complete control over the business and its profits. However, as the expansion of the business depends on the amount of capital you are personally able to inject, one may find investing in the growth of my business very difficult, as capital is often difficult to find. ...read more.

Middle

There is no Act that exists which sets out rules for settling partnership disputes. Limited companies branch into private limited companies and public limited companies (PLC). A private limited company is one that restricts the right to transfer its shares and limits the number of its members. A public limited company is basically the same as private limited company the chief difference is that shares of Plcs may be offered to the public for subscription. The company may apply to the Stock Exchange for permission for its shares to be listed, thus, providing an effective market for such shares. One of the major advantages of a limited company is that the shareholders are not liable for the company's debts beyond the amount of share capital they have subscribed. Another advantage of such a company is that it is easy to transfer the ownership, either wholly or partially, through the selling of all or part of its total shares. But he cost involved in forming a limited company is high. This includes the cost of capital such as duty on authorized share capitals, the cost of formation expenses such as professional fees, printing of articles of association, etc. ...read more.

Conclusion

to market its products. In a franchisee one can seek profits without direct foreign investment also it reducing competition by reducing competition by sharing technology. But it could be frustrating to work in a place where one has to operate it in accordance with systems and standards laid down by the franchiser. Also finding out about a franchise is a costly and time-consuming business. Therefore franchising is a complex area with many sources of potential conflict between the franchiser and franchisee, particularly regarding the terms of the franchise agreement. Leasing and joint ventures are other two legal forms similar to franchising. Licensing is when one country (the licensor) authorizes a firm in another country (the licensee) to use its intellectual property. Joint venture describes a jointly owned business venture involving more than one organization. Therefore when choosing a desired legal form firms need to realize the degree of personal liability as in sole trader, the willingness to share decisions as in partnership, the legal requirements required in limited companies and the need for separate identity as in a franchisee. In the end whatever legal status a firm undertakes it is ultimately the environment the business entity functions it that influences the decision of the manager or director about which legal form to choose and implement in their organization. ...read more.

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