Answered: Forms of business ownership refer to…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Question

Forms of business ownership refer to the legal structures under which a business operates. There
are several types of business ownership, including sole proprietorships, partnerships, corporations,
and limited liability companies (LLCs). Each form of ownership has its advantages and
disadvantages, and the choice of the form of ownership depends on various factors such as liability,
taxation, and management structure.
Critically evaluate the relevance of the advantages and disadvantages in light of current trends and
developments in the business environment.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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