Concepts and explanation
Choose a form by comparing ownership, control, liability, capital, continuity, secrecy and compliance. A sole proprietor has direct control and unlimited liability. Partnership combines skills and capital, with shared decision-making and liability under applicable law. A company is a separate legal entity with perpetual succession; member liability is generally limited according to the form. Cooperatives serve member interests democratically. No form is universally best.
Business example
Two founders may choose partnership for a local design studio, but should agree in writing on roles, capital, profit sharing, decisions, disputes and exit.
Case-based practice
- A business needs substantial investment and continuity beyond its founders. Compare a company with a sole proprietorship on capital, liability, control and formation.
- Write a short answer that names the relevant concept and applies it to the facts.
Quick revision
Revision cue: Define the term, distinguish it from a related concept and support the answer with a relevant example.