Formsof Business Association and Employment
Inthe business world, there are many associations that are present thatexist with the main aim of making the profit. The reason for anybusiness existence is the minimization of the cost and maximizationof the revenues. It is this reason that the most of the businesspeople or the investors engage in risky activities so as to earn highreturns. Due to the existing risks in the market most of theentrepreneurs has decided to share the risks, and later they sharethe outcome of the investment. Sharing of the risks has led the riseof business association like the partnership, corporations, limitedliability entity, joint ventures, unincorporated and looseassociation. These business associations consists of two or morepeople, and then it is only that sole proprietorship consists of justone person. For the business association to grow or operate, therehave to be people who are doing that operations, and it is throughthis person the business exists.
Theprocess that these people gets to work is through employment thatmakes them work for the organization. In the employment, there arethree forms that include an agent, an employee and the independentcontractor. An agent works on behalf of the principal, to the otherparties. The employee works for the business under the control of theemployer.The independent contractor works as their boss as theycan provide goods and services to the business as a different entity.These forms of employments are not mutually exclusive as allemployees are the agents as long as they work for their employers.For the better performance of the organization, the employees shouldbe skilled to provide the specified work for the businessorganization. Division of labor should be encouraged for the matchingof the people with what they are best. These save the time requiredto do an activity, and it also leads to the production ofhigh-quality work.
Inthe form of the business association, a sole proprietorship is themost common one that most people prefer due to the sharing of theprofit. It consists of one person who owns and runs the business.This type of business organization is easy to form as all onerequires the capital and the license, and no legal regulations arerequired for the smooth running of the business. The sole proprietorgets all the profit on its own as he/she does not share the businesswith anybody else. The disadvantage of this type of business is thatwhen the business makes losses the owner does not share it withothers. These forms of businesses are majorly small businesses thatrange from a hardware and grocery store owners to a mother who bakescookies and sells them and the entrepreneur that makes furniture inhis backyard and sells them.
Apartnership is a form of the business association that consists oftwo or more people who engages in business activities with the sametarget of making profits. The people who are in the partnership arethe one who shares the same interests of doing the same activitiesbut at the end of the day they make profits. Partnerships can be frommedical partnerships by which the partners are majorly Physicians tolegal partnerships providing legal services to the public. Theadvantage of this type of business is that it is easy to raise fundsdue to many numbers of the members. It is also easy to form andmanage partnership, as people of the same interest are the oneengaging in the business. Due to a combination of different skillsfrom different people the partnership can attain many activities, andthis is for their benefit. The limitation of this type of businessassociation is that there are people who entirely depends on othersto do things for them
ACorporation is a separate entity from their owners making it a uniqueentity. It is chartered by the state that it is headquartered. I canbe sued, or it can sue on its own, it is taxed, and it can also enterinto contract agreements on its own. The shareholders are the ownersof the corporation and are the one who elect the board of directorsand top management who are responsible for the running of thecorporation. The corporation has a life of its own and withdrawal, orthe dissolution of the ownership does not affect it. The advantage ofthis type of business organization is that the shareholders are notresponsible for the debt of the corporation because stands alone andit`s a separate entity. They can raise more funds, and this helps inincreasing profit sharing ratio. The limitation of the corporation isthat it requires more money and time for their formation compared topartnership and sole proprietorship. There are very many corporationsin the world ranging from financial institutions i.e. CréditAgricole Group that offer banking and credit services in France toNational Agricultural Cooperative Federation (NACF) that is concernedwith agriculture and forestry in Korea.
LimitedLiability Company the other form of business that people nowadays areengaging. This is because of the benefits they derive from thecompany. The members of the company are the owners as they are theone who makes the decisions. They have limited liability to theassets they have the advantage of the continuity. They havecentralized management, and they have transferability of theownership interests. Limited liability company are emerging to beone of the most suitable form of business as its widely spreadingeach and every day due to the flexibility of a partnership.
TheJaguar Land Rover sealed a Chinese joint venture investing up to abillion worth of investment in the Chery Automobile Company in China.The joint venture will enable both companies to have a biggermanufacturing plant near Shanghai and also a better research anddevelopment facility. A joint venture happens when two or moreseparate entities associate together and engage in one specifictransaction or activity. These arrangements are mostly contractualand are expressed by the implied acts or written contracts. This typeof business is mostly practiced by contractors who ventures intolarge construction projects and individually it is hard to do itthereby looking for a joint from another contractor. The other typeof the joint ventures can be created by the organization performingdifferent activities like the design and construction firms.Unincorporated associations are business associations that are notvery common because individuals just come together to accomplishtheir common objective without the use of any form of the businessassociation. They just incorporate their organization without anylegal procedures required, and they also permit themselves tocontracts to hold properties. The organization can be sued, or it cansue in its name. They have their by-laws, constitution to govern themof their duties and rights of the members. They officers to run theassociation is elected for them to run the association.
Ifthe loose association the professionals who are sole proprietorsjoins to share offices and the clerical help and this enables them todo work for each other. This association has the problem of one partynot being paid by another in their activities. This association maymake people think as a partnership, and one mistake of otherprofessionals may affect others who are not even related to thatactivity leading to losing of clients. The last form of businessassociation is professional associations. They consisted of theparticipants in construction industries and had a substantial impacton the construction and design. They speak for the sake of theirmembers before the legislative bodies. They also educate its member`sn matters that are of relevant to them. The membership of thisassociation is acquired through license, not activities.
Theforms of employment in a business association is of importance as abusiness cannot run on its own without the services provided by theemployees, agents or the independent contractors. The agent is thatperson i.e. a real estate agent, who acts on the behalf of theprincipal a house seller to the third party the house buyer. Theagent meets with the customer and transacts with the third party onthe behalf of the boss in this he sells the house to the buyer. Theagent is being paid by the boss for their activities this are thecommission fees for selling the house, and it`s contractual. Theagent may become a regular employee to the boss or also may be anindependent party hired only when required by the boss. They have tobe somebody loyal and to be trusted by the boss. The problem mayarise when the agent does not do well on their activities, and thecomplaint is filed in the name of the boss. There may be a conflictbetween the agent and the customer, and the customer refuses to dealwith the principal and keep on insisting on the fact that theytransacted with the agent himself. The employee is different from theagent as he receives commands from the boss and he does everythingunder the supervision of the boss while the agent acts on behalf ofthe boss but not under the supervision of the boss. The employeesafety is of great importance to the organization as they have toensure that they are good to do their work because without them theorganization is nothing. An organization can do well without theagents, but the organization cannot exist without the employees, sothe employees are the heart of the organization because they are thereason the company exists. The employee is being paid by the employerinform of wage and salaries. The independent contractor is the onewho controls their work performance. They act on their principals aslong they achieve their target.
Thembeing a different entity from the business of the employer they arenot receiving any command from the principal and they do what theyfeel it is good for them. The received payment is depending on theactivities they have done or through the terms of the contract. Astheir working depends on the agreement of the contract they signedwith the business the payment is discharged after the completion ofthe contracts and violation of the contract means that theindependent contractors are not paid. The independent contractors mayalso decide to be paid in installments before the completion of thecontract. This ensures that there are continuous operations in theactivities of the business. The boss may decide to supervise theactivities in or order to achieve the desired results, and this doesnot mean to control the activities of the independent contractor. Incase, the independent contractor incurs a loss from the activitiesthey do the business, or the principal is not liable for the lossincurred in the process. The target of the independent contractorbeing to make a profit from the contracts they ensure to be carefulin their operation for the better outcome of their activities.
Insummary, the form of the business associations is classified in theform of the number of the people they have, the liability of thebusiness, the way of formation and the activities they do. There aredifferent forms of the business associations, and they include thesole proprietorship, partnerships, corporations, limited liabilitycompanies, the joint ventures, unincorporated association, looseassociations and the professional association. In the soleproprietorship, the owner is the boss and is the one who is doing allthe activities, and it is easy to form this association because nolegal formalities are required. In the partnership, the members aretwo or more depending on the people interested in joining thepartnership. It is easy to manage and form as people of the sameinterest are the one running it. In the Corporation, the business isdifferent from the owners as it can sue or being sued in its name.
Thegood thing about a corporation is that the shareholders are notliable for the debts of the corporation. The limited liabilitycompany is an association that has limited liability for theirproperty, and the company can sue or being sued by its name. Thejoint ventures are business association whereby two or morebusinesses come together to do certain activities, and it’scommonly used by large contractors. Unincorporated companies areassociations whereby people just come together and starts doing theirbusinesses without following any legal formalities. The looseassociation is the one whereby independent sole proprietors comes andworks together in one office. The professional associations are theone that professionals educates people on their related activities.In the form of employment, there are three of them, and they includethe agent, employee and the independent contractor. All these formsare under the supervision of the boss who regulates their activities.