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Lecture 1-FSFSB

The presentation explores various business types, including sole proprietorships, partnerships, and corporations, highlighting their merits, demerits, and capital structures. Sole proprietorships offer full control but come with unlimited liability, while partnerships provide shared resources but can lead to conflicts. Corporations offer limited liability and easier capital access but face double taxation and regulatory complexities, making it crucial for entrepreneurs to understand these factors for informed decision-making.

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iqra sarfaraz
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17 views14 pages

Lecture 1-FSFSB

The presentation explores various business types, including sole proprietorships, partnerships, and corporations, highlighting their merits, demerits, and capital structures. Sole proprietorships offer full control but come with unlimited liability, while partnerships provide shared resources but can lead to conflicts. Corporations offer limited liability and easier capital access but face double taxation and regulatory complexities, making it crucial for entrepreneurs to understand these factors for informed decision-making.

Uploaded by

iqra sarfaraz
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Exploring Business Types:

Merits, Demerits, and


Capital Structures
Presented by: Iqra Bibi
In this presentation, we will explore various business types, their merits,
demerits, and capital structures. Understanding these elements is crucial for
entrepreneurs and investors to make informed decisions and optimize their
business strategies.
Sole Proprietorship
Overview

A sole proprietorship is the simplest form


of business, owned by one individual. The
owner has complete control but also
bears all liabilities. This structure
requires minimal paperwork, making it
an attractive option for small
businesses.
The main merits of a sole proprietorship include full control, ease of setup, and
tax benefits. Owners can make quick decisions without the need for consensus,
leading to greater flexibility in operations.
Demerits of Sole
Proprietorship

Despite its advantages, a sole


proprietorship has significant demerits
such as unlimited personal liability and
difficulty in raising capital. The owner’s
personal assets are at risk, which can
deter potential investors.
Partnership

A partnership involves two or more


individuals sharing ownership. This
structure allows for shared resources
and expertise but can lead to conflicts.
Partnerships can be general or
limited based on liability.
Merits of
Partnerships
Partnerships offer shared responsibility,
diverse skills, and increased capital
potential. They enable owners to
combine their strengths, leading to
improved decision-making and
business growth opportunities.
Demerits of
Partnerships
The demerits of partnerships include
potential conflicts among partners
and shared liability. Decisions require
consensus, which can slow down
operations. Additionally, profits must
be shared, reducing individual
earnings.
A corporation is a legal entity separate from its owners. It offers limited
liability protection, meaning shareholders are not personally liable for
business debts. Corporations can raise capital through stock sales.
Corporations provide limited liability, easier access to capital, and perpetual
existence. This structure can attract investors, as their personal assets are
protected, making it a popular choice for larger businesses.
Demerits of
Corporations
However, corporations face demerits
such as double taxation and regulatory
complexities. Profits are taxed at both
the corporate and shareholder levels,
and compliance with regulations can be
burdensome.
Comparing Capital
Structures

Different business types have distinct


capital structures. Sole proprietorships
rely on personal savings, partnerships
can pool resources, while corporations
can issue stocks. Understanding these
structures is vital for funding strategies.
Conclusion and
Insights
In conclusion, each business type has
unique merits and demerits that
influence decision-making.
Understanding these factors and their
capital structures is essential for
entrepreneurs to choose the right path
for their ventures.
Thank You

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