Variant 7.

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Companies in the usa and Great Britain

Partnership. A group of people provides the capital, set up the company and manage it together. There are two types of partnership: partners in an Unlimited partnership or General partnership are like sole traders – if the business fails they are fully liable for all debts, and may even have to sell personal assets. In a limited partnership there can be sleeping partners who do not participate in the management of the company. Sleeping partners have limited liability – in the event of bankruptcy, they only lose their investment, not their personal assets.

Limited company. In a limited company, the capital is divided into shares, which are held by shareholders. Shareholders have limited liability, but the can vote at the Annual General Meeting to elect the Board of Directors. There are two types of limited company: in a private limited company, all share holders must agree before any shares can be bought or sold. In a public limited company, shares are bought and sold freely, for example on the stock exchange.

Strengths and Weaknesses of Different Forms of Business Organization

Proprietorships, partnerships and corporations have certain advantages and disadvantages. These can be considered using the following criteria: simplicity, ability to raise capital, liability, control, taxation, etc. Of the three basic forms, the proprietorship is the simplest. The legal procedures for starting a proprietorship are limited to registering the company's name. Going out of business is also very easy: no legal procedures are required. Starting a partnership is less complex than starting a corporation, but somewhat more so than starting proprietorship. Simplicity has its advantages but it is not the only thing to consider when choosing the right form of business organization.

Ways to raising capital are different under different forms of business organization. The source of capital for a proprietorship is usually the owner's own savings and loans from banks. More capital can be raised by bringing in partners or by incorporating. The so-called venture capital market is another important source of capital for new businesses.

A major difference among organizational forms is the degree to which owners are personally liable for debts of the business. If a proprietorship fails, creditors can claim the owner's property to pay off the debts of the business. For a partnership, liabilities can also be a serious problem. The limited liability feature of the corporation is its biggest advantage.

Partnerships in the Professions

In the professions of law, medicine and accounting, partnerships have long been the main form of business organization. Along with small partnerships there have always been huge ones. Super partnerships like the big accounting and law firms have developed ways to cope with the liability problems. To avoid the problem of unlimited liability a special form of organization known as a limited partnership is used. A limited partnership has one or more general partners who put up some capital, run the business and bear the liabilities of the business. In addition, there are one or more limited partners who put up capital but have no authority in the firm's day-to-day management and do not share its liabilities. The limited partners are much in the same position as stockholders in a corporation. Recently, however, things have changed further. Many medical, legal and other professional partnerships decided to incorporate.