Advantages and Disadvantages of Joint Stock Company

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Advantages and Disadvantages of Joint Stock Company

Advantages and Disadvantages of Joint Stock Company

Advantages and Disadvantages of Joint Stock Company

Choosing the Right Form of Organization

  • Ease of formation: Sole trader can commence and withdraw from business at any time at his own option.

  • Availability of Large Resources: Only a company can raise enough capital and hire expert knowledge required for the management of a big business.

  • Liability or Risk: Members be uncertain to undertake big risk they prefer to invest in a company.

  • Stability: The existence of a company and cooperative society does not depend on the health and wealth of its members.

  • Flexibility: An ideal form of business must have flexibility in operations.

  • Secrecy: Company is required to file a number of documents and publish its annual reports. Therefore secrecy is the least in case of a company.

  • Extent of state control: Company has to fulfill many legal formalities before it can commence its business.

Suitability of Joint Stock Company

A joint stock company is suitable where

  • Volume of business is large

  • Area of operation is widespread

  • Risk involved is high

  • Need for huge financial resources and manpower

  • Need for professional management in its operations

  • Preference for operating on large scale

Summary and Comparisons of Different Characteristics of Sole Proprietorship, Partnership and Company

Summary and Comparisons of Different Characteristics
Summary and Comparisons of Different Characteristics of Sole proprietorship, Partnership and Company

Characteristics

Most advantageous form

Least advantageous form

Availability of finances

Company

Sole proprietorship

Cost of organizing and dissolving.

Sole proprietorship

Company

Ease of organizing and dissolving.

Sole proprietorship

Company

Ease of transferring or withdrawing ownership

Company

Partnership

Efficiency in management.

Company

Sole Proprietorship

Freedom to operate in any state.

Sole proprietorship

Company

Government control and restriction

Sole proprietorship

Company

Length of life

Company

Sole Proprietorship

Simplicity of operations

Sole proprietorship

Company