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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.
Entrepreneurial Skills-I 105

