Question

Consider each of the following forms of business: sole proprietorship, partnership, limited liability partnership, limited liability company, S corporation, franchise, and C corporation. Choose THREE of these forms, and develop a scenario in which each of these forms of business would be the preferred form. For each scenario, justify why the corresponding business form is preferred.

Answer 1

sole proprietorship

Scenario: Sole proprietorship is feasible in a business scenario where quick decision making is needed with less capital and less legal requirements. The scenario surrounding it could be a roadside fast food joint. It requires less capital, quick decision making and legal requirements.

limited liability company

Scenario: A limited liability company is needed where huge capital is required. This capital can either be borrowed at low interest rates from the financial institution or by raising an initial public offer to sell its share and raise capital. It is beneficial in a scenario where the company requires a huge amount of money, such as for the manufacturing of heavy machinery, diversification of the business in various areas such as hotel, food, FMCG etc.

franchise

Scenario: A franchise is beneficial in a scenario where the company needs to work on an already established brand say Dominos. It desires to follow the same set of protocols and does not want to incur a lot of expenditure on advertising for its products.

Answer 2

Coeporation