Question

Q5) What factors should an entrepreneur consider before choosing a form of ownership?

Entrepreneur consider following points before choosing a form of ownership

Answer 1

Factors which considered by an entrepreneur before choosing a form of ownership discussed below:-

1) Future capital requirements:-. Organization requires large amounts of capital to finance their organisation may find it easier to raise capital than sole proprietorship because they can issue additional shares.As a business grow,its capital requirements rise.

2) Risk:-. While there are significant advantages to forming a organization, there are also many risks and drawbacks that may occur for investors in the process.Organisations  are highly-leveraged assets which take on large amounts of monetary risk in order to achieve large amounts of profit.

3) Cost/ Expenses:- .Sole proprietorships and partnerships are easier to form than other forms of organization are also costly to run because managers and directors have to be hired to ensure that the company operates smoothly.

4) Personal Liability of Owner:- if your company files bankruptcy proceedings in a court of law, no one can take away your personal property. Entrepreneurs must weigh the potential for legal and financial liabilities for their companies' obligations.

5) Tax:- Business owners should also consider tax laws, because some businesses are taxed heavily than others. Tax rates for each form of ownership constantly change due to amendments to the tax code. These fluctuations affect the amount of tax a company pays to the government.

6) Culture:- Every successful corporation has created its own unique culture that is particularly suited to its major tasks.

Other Factors:-

A) Continuity and stability

B) The control over decision making

C) Ownership of organization

D,) Compensation etc..