Business Organization Paper Healthcare has drastically changed over the years in the United States. As our population is growing in size, a shortage of the number of health care professionals is also growing. Entrepreneurs have greatly benefited the world of health care by assisting with creating more jobs, producing products and services to assist and meet the growing needs of the population, and starting new business organizations to meet the needs of today’s economy. There are different forms of organizations and choosing the correct one is important, as it will affect the success or failure of the business.
Define the Different Forms of Business Organizations Sole proprietorships are an individually owned business where the individual is entitled to all of the profits and also responsible for all of its debts, liabilities, taxes, and claims that may be made toward the organization. Partnerships are businesses started by 2 or more individuals. In this form of business each individual is equally responsible for the liabilities, management, as well as entitled to a portion of the profits. With the different knowledge and skills each member brings to the business will increase the chance of success.
Corporations are created by law and owned by shareholders. Rather than actual property, the owners own stock or interest. Through selling stock the corporation can raise the capital o help with establishing business and increase financial gain. According to SCORE Associations (2003), limited liability companies are a “new and flexible business organization of one or more owners that offers the advantages of liability protection with the simplicity of a partnership, i. e. partners are not liable for business debts” (Para. 3).
Explain the Advantages of Each Form of Business Organization Sole proprietorships are the easiest to manage due to the nature of the business and it is also easy to close if needed. Partnership business’s benefit by having shared responsibility in managing the organization and raising funds would be easier with multiple partners in the business. In corporations, according to Naol (2011), the shareholders “can only be held accountable for their investment in stock of the company” (Para. 6). However when debt raises it can be paid through the sales of stock.
Some advantages associated with limited liability companies include creditors can not seize the owner’s personal property, there is no double taxation, and health insurance can be deducted from the income tax. Explain the Disadvantages of Each Form of Business Organization Sole proprietorships place the owner at risk if debts outweigh the profits due to personal property being at risk because of the owner being responsible for all debt and liabilities. This form of business may struggle with the type of employees it draws due to personal funds needed to start the business.
If the owner is not available to run the business it is at high risk of failing. In a partnership business because each owner is equally accountable for the liabilities each member will be held responsible for any negative actions by another partner. Because of diversity members may run into disagreements with the management or expenses of the business. According to Business Finance (2011), “The process of incorporation requires more time and money than other forms of organization” (Para. 3). Taxes may be higher for a corporation, and there are more strict regulations to follow. A corporation may also be sued.
Some disadvantages of a limited liability company are that owners are not allowed to have a wage and they must pay self-employment taxes. Define the Appropriate Form of Ownership for an Aggressive Entrepreneurial Firm According to Pullman (2011), the most appropriate form of ownership for an aggressive entrepreneurial firm would be a limited liability business. An entrepreneur who is willing to take risks in the process of being aggressive would be willing to even risk personal wealth and property, which would lead to greater success than entrepreneurs who were not as willing to take such risks.
Conclusion The main focus behind marketing and healthcare is business growth and financial gain, and the form of business used plays a critical role in the success or failure of the industry. Through knowledge of the various forms of business and their advantages and disadvantages will lead to the entrepreneur being able to make an informed choice of which business form will best meet their needs to produce a successful venture. References Business Finance. (2011). Types of Business Organizations – Corporations. Retrieved November 19, 2011, from http://www. businessfinance. om/books/startabusiness/StartABusinessWorkbook012. htm Naol, M. , A. (2011), Forming a Texas business corporation. Retrieved November 19, 2011, from http://www. nacollawfirmblog. com/business-transactions/forming-a-texas-business-corporation Pullman, J. (2011). How you structure a new entrepreneurial business matters. Retrieved November 19, 2011, from http://www. streetarticles. com/entrepreneurialism/how-you-structure-a-new-entrepreneurial-business-matters SCORE Association. (2003). Common forms of business organization. Retrieved November 19, 2011, from http://www. tulsascore. org/organization. html
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