Page 107 - AI Ver 1.0 Class 9
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Disadvantages of Partnership
            Some disadvantages of partnership are:

               • Difference of opinion may result in disharmony and lack of management.
               • The lack of trust among the partners may lead to dissolution of the firm.
               • Divided decision making.
               • Partners are jointly and individually liable for other partners’ actions.

            Corporation
            Corporation is a business organisation with a separate legal entity created by individuals or shareholders who come
            together to pursue a common goal. They elect a board of directors to look after the organization’s activities and
            are the organisation’s policy setters. Corporations can be business oriented profitable organisations or non-profit
            charitable organizations. Some of the famous corporations are Coca-Cola, Johnson & Johnson, Microsoft etc.

            Advantages of Corporation
            Some advantages of corporation are:
               • Personal assets are totally protected as it is not owned by an individual.

               • Shareholders have ownership in terms of percentage, so it can be easily bought and sold.
               • Funds can be easily raised through publicly traded stock.

            Disadvantages of Corporation
            Some disadvantages of corporation are:
               • Expensive to form and operate.
               • More administrative duties and management formalities.

               • Different tax policies for different types of corporations.

            Limited Liability Company (LLC)
            Limited Liability Company is most suitable and popular for small or low risk businesses and is a blend of sole proprietorship,
            partnership and corporation. It is a legal firm owned and managed by its members and shareholders. They risk their
            investments keeping their personal finances protected. It is taxed as either a sole proprietorship or a partnership, based
            on the number of members. Some of the famous LLCs are SONY, IBM, eBay, etc.

            Advantages of Limited Liability Company
            Some advantages of LLC are:
               • Number of members are not restricted.
               • It can be started with minimum amount of capital money which can be a movable asset or an intangible form.
               • Owners are not responsible for business debts and liabilities.

               • Less administrative duties and management formalities.
               • Simple and efficient taxation policies.

            Disadvantages of Limited Liability Company
            Some disadvantages of LLC are:
               • Difficult to transfer ownership.
               • If a Limited Liability Company has multiple shareholders, then their opinions and views need to be taken into
              account.

               • More expensive to form than sole proprietorships and partnership firms.
               • Complex account management.
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