a. Define the three different ways that you can organize your new business. Given the above facts, please provide one advantage and one disadvantage with respect to each type of business organization and then choose a business structure for your new venture; explain why you chose the way you did. (10 marks)
There are essentially three major types of business organizations:
Sole Proprietorship: A business which involves an individual carrying on business alone, the business is the sole responsibility of one person, the owner. An advantage of running a business as a sole proprietor is that the owner has complete control and decision making power over the business. A disadvantage however is that the sole proprietor is held personally liable
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I choose to start cooperation because it is a separate legal entity, separate from the people who own, control and manage it; by registering my business as cooperation I will not personally be responsible for the corporation’s debts.
b.Based upon the business organization that you chose, how are you going to raise the funds to finance the business? Also, please describe what the provider of funds will receive in exchange for these funds. (10 marks)
Since I have estimated that I will need $1,000,000 to finance my business I have to now think of how I am going to raise this capital, the different ways to raise capital, would fall under two categories – equity and debt financing. I will begin to sell ownership shares of my business by approaching investors, I already have a friend who has informed me that she would be interested in my venture and would be willing to invest $100,000 in my business, I have my family too that has pledged to help me financially. I can ask them to become equity investors in my business; I could offer them a share in the ownership of my business. Depending on the success of my company I could agree to issue dividends to them too. Various governments also give out loans to new businesses, called small business loans to encourage new
| A sole proprietorship is easy to create; there is minimal creation cost and time.The single owner has autonomy in decision making; sole owner makes all decisions related to the business and has complete ownership of business’s finances.
b) Describe the organizational forms a company might have as it evolves from a start-up to a major corporation. List the advantages and disadvantages of each form.
Sole trader is where a business is run as an individual; so that all profits are their own after tax has been paid on them. Within a sole trader organisation it is possible to employ staff, as the sole trader only means that you own the business personally and do not actually have to work by yourself.
Sole proprietorships are the most common type of business in the U.S. They are most commonly chosen because they are the easiest type of business to set up and give the sole owner of the company complete control of the company. There are many benefits to a sole proprietorship in regards to control, profit retention, and convenience.
Sole proprietorship: Is the simplest and most common business structure. There is no legal distinction between the proprietor and the business, which means it is autonomous. You are entitled to all profits and responsible for all your business's losses and liabilities.
A sole proprietorship is a form of business that is owned by a single individual. • Liability – Due to the lack of legal distinction between the owner and the business, the owner is fully responsible and liable for all debts that the business incurs in the same manner that an individual is fully responsible and liable for all debts that they incur. There is no legal distinction between the assets of the owner of the sole proprietorship and the business; this means that creditors have the ability to come after the owner’s business and personal material assets. Income Taxes – Since the business is the same as the owner of the sole proprietorship, all profits or losses from the business are filed by the
Sole Proprietorship: This is a type of business is where the business and the owner are one in
Sole Proprietorship: A type of business that is owned by and run by one person with no legal difference between the business and the owner. It is easy to form with no cost or time to initiate. It gives the owner the ability to self-govern the business. There are drawbacks; only one owner can be established not allowing a partner. Also, unlimited liability puts the owner’s personal assets in jeopardy with the creditors.
Sole Proprietorship: The word proprietorship can sound intimidating. It is important to remember that most things are simplified with knowledge. If your business is a sole proprietorship then you as an individual are the owner and operator of that business. This means the sole proprietor handles everything from setting up
Part II: Make your recommendation as to what form of organization you believe will be best and be sure to explain the reasoning for your choice.
* Limited Liability - Unlike partnerships and sole proprietorships, corporate shareholders are not liable for any of the corporation's debts.
Sole proprietorship is a business organization operated by one owner. For example, you start a landscaping business by yourself.
In setting up a new business the first step is setting up the best business structure for the need of the business. There are many different things that need to be looked at in order to determine the correct entity that will be used. Will there be partners is a big question in this determination, another questions which is the most correct for the business legally. Another consideration needs to be the legal liability as well as the tax liabilities in considering the best choice for the entity of the business.
Sole trader-it’s a business that is owned by only one person and it can have one or more employees. This type of business organization often succeeds because the owner has total control of businees, the owner keeps all profit and it’s cheap to start-up,but also it can be difficult to raise financial,it may be difficult to specialise or enjoy economies of scale and can also have problems with continuity if sole trader retires or dies.
3. Select appropriate sources of finance and make recommendations on the best ways of raising finance