Top Posters
Since Sunday
14
14
12
11
11
11
10
10
10
10
9
9
New Topic  
wrote...
Posts: 148
A month ago
What are the three types of firms? Explain the major advantages and disadvantages of each.
Read 81 times
1 Reply
Replies
Answer verified by a subject expert
wrote...
Staff Member
Top Poster
Posts: 1544
A month ago
Sign in or Sign up in seconds to unlock everything.
The three main ways of organizing a firm have both advantages and disadvantages:
· Proprietorship.
ADVANTAGES—easy to set up; managerial decision-making is simple and rapid; and profits are taxed only once.
DISADVANTAGES—bad decisions on the part of the owner are not subject to review; the owner’s entire wealth is at stake because of unlimited liability; the firm dies with the owner; and acquiring capital and labor is expensive.

· Partnership.
ADVANTAGES — easy to set up; has diversified decision-making so that more than one
person’s expertise can be utilized; can survive the death or withdrawal of a partner; and profits are taxed only once.
DISADVANTAGES—all the owners’ wealth is at risk because of unlimited liability; if there are many partners, gaining a consensus about managerial decisions may be difficult; the withdrawal of partner may create capital shortage; labor costs are high compared to corporations; and capital costs can be high.

· Corporation.
ADVANTAGES—perpetual life; limited liability for its owners; readily available, large- scale, and low-cost capital; can rely on professional managers rather than the talents of the owners; and reduced costs from long-term labor contracts.
DISADVANTAGES—potentially complex management structure may lead to slow and expensive decision-making; and profits are taxed twice, once as corporate profit and once as income to the stockholders.
This verified answer contains over 220 words.
1
Thank you for using Biology-Forums.
Related Topics
New Topic      
Explore
Post your homework questions and get free online help from our incredible volunteers.
Learn More
Improve Grades
Help Others
Save Time
Accessible 24/7
  83 People Browsing
Your Opinion
What's your favorite coffee beverage?
Votes: 64

Related Images
 829
 566
 96