While there are a lot of advantages and disadvantages that go along with each kind of business ownership, I think the two options I like most are the LLC, and C-Corp options. LLC stands for, Limited Liability Company and C-Corp stands for, Corporation. The LLC is currently the most realistic option, while the C-Corp is more of a goal. While both of these are different, they both share one HUGE advantage and that is the limited liability that comes with them. Today's world is full of people looking for any reason to sue you. Choosing one of these two options makes the company reliable for any legal issues versus the owner/owners. So in short when they sue, they can only take the LLC's assets, not the owners. One awesome advantage that comes with an LLC, other than the protection from legal liabilities like stated above, is the ease of getting it. They also take much less paperwork and effort to get started so they are fairly cheap. Another nice plus that comes with an LLC is that you have fewer restrictions on how you can divvy out your money(profit sharing). In my opinion corporations actually have two of the best advantages out of all the available options. Being a corporation allows you to sell stock, so you …show more content…
The largest being, that if you even want to start one, it requires and ridiculous amount of start-up. Another depressing fact is that corporations can get taxed twice. Once when they make a profit, and then when they split it. Last but not least this option is highly regulated and there is a seemingly endless amount of paperwork involved. On a lighter note, the disadvantages of an LLC are much more feasible. The biggest bummer about owning an LLC is that you have to pay a self-employment tax. But when you think about what the tax is for it makes sense. The other disadvantage is that the shelf life for an LLC is shorter than the other
Corporation – “A business organization that exists as a legal entity and provides limited liability to its owners.” (Longenecker, Petty, Palich, Hoy, Pg. 205) The main advantage of a corporation is that the business liability falls onto this entity instead of the individuals that own it. The disadvantages of this organization are found mostly in its formation. A corporation is expensive to create and requires compliance with state
LLCs must typically pay more fees to file as LLCs compared to some other business entities or sole proprietorships. Additionally, many states require yearly renewal fees. However, these fees are usually less than what some other corporations have to pay. Because of the protections afforded to LLCs, some types of businesses are ineligible to file as LLCs. Banks, insurance companies, and medical service companies are examples of businesses that can not be a LLC. Another big disadvantage is taxes. Although LLC’s allow owners to avoid federal taxes, you may actually end up paying more than it would with a different corporation, depending upon the nature of the business. Working with an accountant and/or tax lawyer is a really good idea when planning your business and forming your LLC but can also be quite expensive. The LLC business form is a relatively new concept. As a result, not a lot of cases have been decided surrounding LLCs. Case law is important because of predictability. If you know a court has ruled a certain way, you can act in a specific way to protect yourself. But if not many laws have been established yet, there is a certain vulnerability with your corporations that could expose you to greater
The disadvantages for a limited partner are no different. Let’s begin with illiquidity, because it could take months to sell the limited partnership shares. Second, while real estate tends to maintain or increase in value, there are also times of declining property values as well. Third disadvantage is management problems. The decisions made by management can affect the investors who are blissfully unaware of the happenings because they are not involved; meaning an limited partner, while not involved in the paperwork, still needs to be aware of the actions taking place. Another disadvantage is lack of tax shelter, while the limited partnership provides a tax advantage with regards to business tax, the income still is included as personal income. The Tax Reform Act of 1986 limits the ability to use losses on real estate investments from income dividends and interest, basically dissolving the tax shelter aspect of real
Below I have set out a table to show the Advantages and Disadvantages of a public limited company. ADVANTAGES DISADVANTAGES Shares offered for sale on the stock exchange, so that large amounts of capital can be generated. Shareholders protected by limited liabilit... ... middle of paper ... ...ibit the already efficient practices from continuing.
Every single fact concerning the business is relevant to the choice of entity decision. Not all of them are of equal importance, but they all matter to some degree. The considerations that should be in the forefront are not the sale of ownership interests to the public, or venture capital financing--these things come later (hopefully!). Instead, the initial focus should be on:
And there are some advantages of a public limited company such as there is limited liability for the shareholders which mean the maximum losses that will cause are the amount that the shareholders invested in that company it won’t cause more than that so for the investor the risk is limited. Other than that the public limited company’s potential capital that they can raised is large they can raise fund by selling shares or borrow from bank. Also public limited company is easier to obtain financing because most of the banks and financial institution would like to invest to the larger company just like PLC. PLC have high continuity although the helm of company step down the company can still operating normally because shareholder can transfer their shares to anyone. There are many advantages of PLC but it still have some disadvantages for instance :PLC must make public annual financial report of the company also if the company close the liquidator must be realize the all assets to distribute to all creditors and shareholders. So the owner of Tesco are those people who bought the shares of Tesco. Furthermore, every year Tesco will held the annual general shareholders meeting. Tesco will report the annual accounts, strategic report and directors' report etc. to the shareholders in the meeting. Therefore the shareholders of Tesco can have more information and data to grasp more about
The main obstacle arising during a rapid growth is maintaining a corporate culture. Due to this the company, which in this case is Kind LLC must find a way to implement ways to promote and maintain their culture. That culture is their emphasis in kindness in both the business and public setting. Kind must viciously strive to keep their employees connected to the corporate mission of kindness and engaged them as much as possible. This would in result lead to making great snack bars, offering “kind” services, giving back to the community, such as the current endeavors that the founder is pursuing, and last but not least creating a great environment for our stakeholders, such as our clients, employees, etc.
Make a list of the rights of a corporation and a separate list of the responsibilities. Which is longer? Why do you think this is?
The capital structure of a firm is the way in which it decides to finance its operations from various funds, comprising debt, such as bonds and outstanding loans, and equity, including stock and retained earnings. In the long term, firms seek to find the optimal debt-equity ratio. This essay will explore the advantages and disadvantages of different capital structure mixes, and consider whether this has any relevance to firm value in theory and in reality.
Franchising and licensing are means of expanding a business. These two terms are often confused with one another. However, franchising and licensing come from two distinct areas. A comprehensive difference is shown in the following table.
Five advantages for owning your own business are: 1) The owner receives all profits, meaning that all earnings go to the sole proprietor, or the owner, and isn’t shared with anyone else. The profit is not split among partners, or split among a corporation. So when you own your own business, you’re the first and only one that receives all earnings and profit. So if a person has a successful firm, he/she is the first to reap the success and rewards. 2) Another advantage of owning your own business is that you’re your own boss. You can set your own hours, decide what you want to do with the company, no manager to answer to. Basically, you’re in charge of everything. The owner solely makes all decisions. Or in other words, you’re running the show. 3) An additional advantage is that a sole proprietorship can be easily organized. It’s easy to start your own business. First of all, it costs very little money to start your own business. As a sole proprietor, you have minimal legal requirements. The owner doesn’t have to establish a separate legal entity. All that is needed is to register the company with the state and apply for an occupational license and any additional licenses required for the state. ...
Some people do not like the way some businesses are ran and would like to change them. Others do not like to be employees for certain employers because of how the business works. There are many pros and cons to owning and running a business and making the choices in how to do things in the business. What some people do not know are the many benefits to owning a business instead of just being an employee.
Corporate Entrepreneurship can be seen as the process whereby an individual or a group creates a new venture within an existing organization, revitalizes and renews an organization ,or innovates. Zahra’s(1986) definition of corporate entrepreneurship suggests a formal or informal activity aimed at creating new businesses in established firms through product and process innovations and market developments,whereas sathe(1985) defines corporate entrepreneurship as a process of organizational renewal. Corporate Entrepreneurship has emerged as a much needed ingredient contributing towards the growth of any organization under a changing business environment.
During the last few years, Harry Davis Industries has been too constrained by the high cost of capital to make many capital investments. Recently, though, capital costs have been declining, and the company has decided to look seriously at a major expansion program that had been proposed by the marketing department. Assume that you are an assistant to Leigh Jones, the financial vice president. Your first task is to estimate Harry Davis’s cost of capital. Jones has provided you with the following data, which she believes may be relevant to your task.
4. Control: the members of the LLC have the ability to set up control of the corporation as they see fit.