Forms of Business Organizations
| Forms of business organizations |
|---|
| Partnerships |
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| Corporations |
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| Proprietorships |
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| This is where two or more individuals reach an oral, formal or informal agreement to combine their assets to start noncorporate business operations. This business form is also subjected to unlimited liability though their formation is easy. |
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| These are the biggest form of business organizations that are started by a state. They enjoy the status of a person i.e. they are legal entities that have rights and hence can sue and get sued. They, therefore, enjoy limited liability and their lifespans are independent of the lives of the managers and owners. |
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| This is the most common form of business in which business operations are begun by an individual after obtaining the relevant documents from the government licensing authority. They are inexpensive to start and have unlimited liability. |
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The key users of financial information are investors, lenders, creditors, government, and employees. Investors rely on financial information in order to assess the risk and security of their investments. Future plans or previous performance of an organization will affect the decision of the investors. Employees use financial information to determine whether the organization can assure them of job security and of the potential future rise in their salaries. Lenders and creditors need to know whether the loans and debts respectively will be paid off in time. Is the business able to pay the interests placed on the loans or can the business pay the short
time debts? Financial information enables the government to see how the economy is performing hence making planning easy. For taxation to be fair, the tax authority needs to know how the business organization has performed in its operations.
References
Storey, D. J. (1994). Understanding the small business sector. University of Illinois at Urbana-Champaign’s Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship.
Wright, W. F. (1980). USERS OF FINANCIAL INFORMATION. 284-298.
Yalden, R. S. (2008). Business Organizations: Principles, Policies, and Practice.
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