Your passion is baking and your lifelong dream has been to o

Your passion is baking and your lifelong dream has been to own and operate a bakery. You just inherited $50,000 from a distant (and rich) relative and you want to use that money to open a bakery. While $50,000 is a very good amount to get started, you would like to consider obtaining additional capital from outside investors. What form of business organization would be best for your business and why? Consider all reasonable alternatives and explain the advantages and disadvantages of each

Solution

Possible alternatives for form of business organizations are:-

A. Sole Proprietorship - Firms owned by one person.

Advantages -

1. Complete control.

2. Profits belong to one person \"the proprietor\".

3. Easy to dissolve.

Disadvantages

1. Unlimited Laibility is one drawback.

2. Employee benefits are not deductible to give tax relief.

3. Hard to raise funds while working alone.

B. Partnerships - Two or more people share the business ownerships.

Advantages -

1. Relatively easy to establish.

2. improve ability to raise funds.

3. Complementry skills helps to overshadow the partner weakness.

Disadvantage

1. Profits have to be shared.

2. Control is shared.

3. Partners are jointly and individually liable for the actions of the other partners.