Forms of Business Organisations

Forms of Business Organisations

 

There are many forms of business organisations you may want to consider for your company. Before we introduce these different forms, below are some factors that you should consider when deciding on a form of business organisation:

  • Nature of business: - The organisation of your business will depend on the nature of your business.
     
  • Scale of operations: - volume of business and size of market area are key considerations. Large market operations are better catered to by public or private companies. Small operations are set up as partnerships or proprietorships.
     
  • Degree of Control: - if you want direct control, then proprietorship is a good option. Incorporation of a business involves separation of ownership and management.
     
  • Amount of Capital: - as need for resources grow, then for example,  a partnership may be converted into a company.
     
  • Volume of Risks & Liabilities: - Willingness of owners to bear risk. A sole proprietorship bears high risk, whilst public or private companies have lower risks for owners, as there is separation of the legal entity and ownership.
     
  • Comparative tax liability- Your company's tax liability will depend on the form of business organisation you choose.

We have discussed the different forms of business organisations in the following sections.