Industrial and Size Distribution of Proprietorships, Partnerships, and Corporations
Whether a firm will be organized as a proprietorship, a partnership, or a corporation depends on a balancing of the advantages and disadvantages of each form. For the small single-owner firm that relies on bank financing, and where the owner is in a low tax bracket, the proprietorship is probably the best choice. Partnerships are preferred over corporations when the number of partners is small (say, two or three), the business is so small that incorporation fees are an important expense, and where the owners are in low tax brackets. In Britain proprietorships and partnerships belong to the so-called private companies. The corporate form is chosen when there is a need to acquire vast amounts of funds from a large number of individuals, and especially when the owners are all in low tax brackets.
About 77 percent of all business in the United States (in terms of numbers) are proprietorships, 8 percent are partnerships and 15 percent are corporations. But corporations account for 76 percent of net profits of all businesses, proprietorships for 20 percent, and proprietorships for 20 percent, and partnerships for only 4 percent. Proprietorships are most prominent in finance, insurance and real estate, and retail trade and services. Corporations are dominant in mining, manufacturing and wholesale trade. One reason for the prominence of proprietorships and partnerships in the service area is that, by law, certain service firms cannot be organized as corporations – law firms, medical firms, for example. Bur except for such special cases, the distribution of firms types reflects the advantages and disadvantages discussed above when a business firm is organized, the legal form chosen by the owners is typically chosen to maximize the economic advantages of them.
We have already seen to the corporate form of business for large firms especially those involving a large number of owners. While corporations constitute only 15 percent by number of all business firms, they account for 88 percent of all firms with receipts of $ 1,000,000 or more per year. Moreover, of these large firms corporations have 97 percent of total receipts. Proprietorships and partnerships dominate both in terms of numbers and in terms of receipts for small firms, but corporations are the most important business type for receipts of $500,000 per year or more.
Text 3
Дата добавления: 2016-01-04; просмотров: 23; Мы поможем в написании вашей работы! |
Мы поможем в написании ваших работ!