It is difficult for a proprietorship to obtain large sums of capital; 2. The proprietor has unlimited personal liability for the business’s debts 3. The life of a business organized as a proprietorship is limited to the life of the individual who created it. 2- Partnerships with the advantage of its low cost and ease of formation The disadvantages are: 1. Unlimited liability; 2.
Proprietorship has three important advantages: it is easily and inexpensively formed; its subject to few government regulations and; its income is not subject to corporate taxation but is taxed as a part of the proprietor’s income. Limitations include: difficulty obtaining capital needed for growth; having an unlimited personal liability for business debts can result in losses that exceed the money invested in the company and; life of a proprietorship is limited to life of its founder. For these reasons sole proprietorship is used mainly for small businesses. A partnership exists when there are two or more persons or entities associate to conduct non-corporate business for profit. Partnership agreements define the ways that any profits and losses are shared between partners.
For this, you must have expertise in finance. 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. | Advantage | Disadvantage | Sole proprietorship: | -easily and inexpensively formed-subject to few government regulations-income not subject to corporate taxation | -difficult to obtain capital needed for growth-unlimited personal liability-life of proprietorship limited to life of founder | Partnership: | -easily and inexpensively formed-subject to few government regulations-income not subject to corporate taxation | -difficult to obtain capital needed for growth-unlimited personal liability-life of proprietorship limited to life of founder | Corporation | -unlimited life-easy transferability of ownership interest-limited liability | -corporate earnings may be subject to double taxation- more complex and time- consuming than creating a proprietorship or a partnership | c. How do corporations go public and continue to grow?
The business-related acts of one partner can legally bind all other partners. So it's essential that you enter into partnerships only with people you trust. It is equally essential that, no matter how much you trust your partners, you execute a written partnership agreement establishing each partner's share of profits or losses, day-to-day duties, and what happens if one partner dies or retires. Another disadvantage of doing business as a partnership is that all partners are potentially personally liable for all business debts and
The most common word used in the transaction of merging or acquiring companies is ‘synergy’. This explains how two companies combine their core business activities so as to increase an overall performance and at the same time reducing their transaction costs. The main reason as to why companies merge or are taken over is mostly based on financial purposes. Often, firms are unable to perform to a required or to their desiring
Describe at least two advantages of the corporate organization. The primary disadvantage for a corporation is double taxation. A corporation is a legal person and must pay taxes on profits. Stockholders must also pay taxes on dividends received from a corporation, resulting in double taxation. Two advantages in forming a corporation is the limited liability for owners from the business’ debt and the potential for the unlimited life of the business.
In a regular partnership, liability for other partners' misdeeds is limited to the amount of a particular partner's investment in the business. b. Attracting large amounts of capital is more difficult for partnerships than for corporations because of such factors as unlimited liability, the need to reorganize when a partner dies, and the illiquidity (difficulty
Private companies have a relatively small number of shareholders and do not offer or trade shares to the general public. The Purpose of a Limited partnership organisation is to make profit, Limited partnerships are usually owned by two or more people, which they finance and run join tly for personal gain, in this type of organisation. Profits are shared equally. A Public Limited company (PLC) this organisation is similar to a structure of a private company, however their purpose involves a more long-term strategy for profit making. Shareholders own PLC’s, and unlike private limited companies these are advertised to the public.
There are important disadvantages to this business form, too. For example, a sole proprietor is legally responsible for the business’s contracts and the torts he or she or any of his or her employees commit in the course of employment. In addition, a sole proprietor’s access to the business’s capital is limited to personal funds plus any loans he or she can obtain A sole proprietor bears the risk of loss of the business; that is, the owner will lose his or her entire capital contribution if the business fails. In addition, a sole proprietor has unlimited personal liability (Cheeseman, 251, 2012). General partnership, or ordinary partnership, A general partnership, or partnership, is a voluntary association of two or more persons for carrying on a business as co-owners for profit.
Company mainly focused on maximizing the shareholder value by the CEO and other management’s managerial philosophy. Currently, Hill Country uses a risk adverse strategy to choose their business or project. Hill Country’s industry is high competitive but it kept going well with cost efficiency and quick reaction to customer requirements. From these reasons, Hill Country has few risks. However, analyst and experts present that Hill Country’s excess liquidity with zero debt is going to lose benefit and fail to maximize the shareholder value.