47. What are the major types of business organizations?

There are three major kinds of business organizations: the sole proprietorship, the partnership and the corporation.

The most common form of business organization is the sole proprietorship — a business owned and run by one person. They have minimal legal restrictions and do not have to pay the special taxes placed on corporations.

A partnership is a business that is jointly owned by two or more people who have combined their talents and resources for the purpose of earning a profit. Partnerships are most common in such professional fields as medicine, law, accounting, stockbroking, but they are also found in manufacturing, wholesale and retail trade.

As corporations are the most powerful form of business organizations, they may attract a large amount of capital and can invest it in plants, equipment and research. That’s why they have great capacity for growth and expansion.

48. What is a sole proprietorship?

The most common form of business organization is the sole proprietorship — a business owned and run by one person. The main advantage of a sole proprietorship is that it is the easiest form of business to start and run.

The second advantage is that it has minimal legal restrictions and doesn’t have to pay the special taxes placed on corporations. Sole proprietorships are generally found in small-scale retail and service businesses.

The major disadvantage of a sole proprietorship is the unlimited liability that each proprietor faces. Since the business and the owner are legally the same, the owner is liable for all financial losses and debts of his business. This could mean the loss of personal property such as automobiles, homes and savings.

A second disadvantage of the sole proprietorship is that it has limited financial resources. The money that a proprietor can raise is limited by the amount of savings and ability to borrow.

49. What is a partnership?

A partnership is a business that is jointly owned by two or more people who have combined their talents and resources for the purpose of earning a profit.

The most common form of partnership is a general partnership. General partners own the business, work in it and share the profits and losses. They are responsible for the management of the business and usually agree with each other before making any major decisions.

Limited partnership is a special type of partnership. Limited partners are only liable for the amount they have invested in the business. They are usually not involved in the management of the firm.

Like sole proprietorship they are easy to form and often get tax benefits from the government. The major disadvantages of partnership are: 1) unlimited financial liability – each partner is legally responsible for all debts and the whole business; 2) partners’ disagreement with each other causing management conflicts.

50. What type of economy does the usa have?

The USA has a developed free enterprise economy in which people are able to own capital and property and to run their own businesses for making profit. Most economic decisions in the country are made in the marketplace.

Despite the fact that the US has a free enterprise system, government’s role in the economy is so important that economists describe it as a mixed economy. It is an economic system that combines elements of public ownership of the means of production with private ownership, and elements of free enterprise with government participation and control.

The USA is a country with a highly developed economy. It produces 25 per cent of the world’s industrial products, agricultural goods, and services.

The United States owes its high level of economic development to its great wealth of minerals and fertile farm soil, together with a moderate climate.