Unit 1: May 2011, Question #2(b)

Only one (1) benefit for each type of business entity was required, however for the sake of expanding students' knowledge, three (3) benefits are listed for each below.

1. Benefits of operating as a proprietorship:

• Easy to set up.
• Ownership is easily transferable. The sole trader can sell or transfer ownership at their discretion.
  
• No bureaucracy in the decision making process as the business is owned and controlled by one individual.

 
     2. Benefits of operating as a partnership:

• Partners can share the responsibility of managing the organization which can go a long way to ease the burden usually associated with a proprietorship where there is only one person responsible for managing the entity.
• There is an opportunity to raise more capital when compared to a proprietorship.
• The partnership will benefit from synergy as each partner will bring their own set skills, experience, knowledge and contacts to business, potentially giving it a better chance at success than a proprietorship.

 
     3.  Benefits of operating as a company/corporation:

• It is fairly easy for a company to raise larger capital amounts through the sale of shares.
• The shareholders, who are the owners of the company, enjoy limited liability as they only stand to lose what they have invested in the company.
• Corporations enjoy continuity as most businesses continue to operate after the death of the owners as shares are very easily transferable.

     4.  Benefits of operating as a non-governmental organization (NGO):

• NGOs can usually access government funding in the form of grants.
• NGOs are no liable to pay taxes.
• NGOs are not required to publish their financial statements. This significantly reduces the expenses of this type of entity when compared to a company/corporation that is required to publish financial statements.

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