UNIT 1

Images of business

Learning goals

After studying this unit you will be able to:

• define factors influencing the choice of business form

• speak on advantages and disadvantages of the sole proprietorship

• distinguish advantages and disadvantages of the partnership

• speculate on advantages and disadvantages of the corporation

• analyse and compare different forms of business organisation

READING I

Forms of business

Before you read

Vocabulary task

1. There are some collocations with the word 'business’. Think of other word combinations with the word. Use dictionaries to help you.

coal business …

business address …

to set up a business …

2. Word building: complete the following table with the appropriate derivatives

Verb	Noun	Adjective
fluctuate		–
	influence	influential
–	structure
reflect		reflexive
–		available
–	mobility	mobile
	finances
select	selectivity
		legal
require		–

Think ahead

1. What is your dream job?

2. What is more attractive to you: to work for a start-up or a multinational company?

3. Do you agree that “to be successful, you have to have your heart in your business, and your business in your heart”? (Thomas Watson)

4. What skills does going into business require?

Text 1.1 Read the text and answer the question: Why it is very important to make a right decision on choosing the legal structure of your business?

Business Ownership Selection

Before you enter the complex arena of business and its myriad of laws which influence your freedom of choice and mobility of action, you must first choose the legal structure for your business that will best suit your needs and the needs of your particular business. In order to intelligently select the legal structure for your business, you must ask yourself, "What are my alternatives?"

There are many reasons today for owner or would-be owners of businesses to look at the legal structure of their firms. The changing tax laws and fluctuating availability of capital are just two situations which re­quire alert managers to review what legal structure best meets their needs.

There are three principal kinds of business structures: the sole proprietorship, the partnership and the corporation (the sole trader, the partnership, the company, joint stock company). Each has certain general advantages and disadvantages, but they must all be weighed to reflect your specific cir­cumstances, goals and needs. Which of the forms is right for your business depends on the type of business you are going to run, on how many owners you have and on your financial condition. There is no unequivocal choice that would suit every business. Business owners have to pick up the structure that best meets their needs. There are several of the most important factors to consider:

• potential risks and liabilities of your business;

• formalities and expenses involved in establishing and maintaining the various business structures;

• your income tax situation;

• your investment needs;

• degree of control over the business you wish to retain;

• possibility of transferring your ownership; and

• degree of secrecy.

To appreciate these considerations we shall examine each form of ownership in relation to these important factors.

Concept check

1. What question should you ask yourself in order to select the legal structure for your business?

2. What are the main kinds of forms of ownership? Describe them.

3. What factors should you take into account while picking up the structure that suits yours goals? Add your own points to this list.

READING II