Business structure Advice
Business Structure Advice
Jeanette M Melchor Maldonado
FIN/571-Corporate Finance
March 19, 2014
Prof. Ricardo Rivera-Matos
Business Structure Advice
Good evening John Owner,
To start your business you need to verify and determined some crucial decisions at first. First of all choose the products or services to sell, the markets to sell them and the superior strategies for selling them. How to raise the money to develop your idea with the products and services, acquire all necessary assets and hire the right staff. It is important to be careful and realistic in assessing the opportunities. Don’t overanalyze the opportunities to the point you don’t want to proceed. Many successful entrepreneurs had failed before maybe more than once in their careers but they had learned from their mistakes and used it for the success of their business.
Another imperative decision is to decide which form of organization will work best for your business and what are the pros and the cons for each of them. The basic forms of organization are the sole proprietor, partnership and corporations. Sole proprietorship can be the least expensive type of business structure to start because to start this all you need is a license from local or state government. They can have fewer regulations and all the profits stay with the owner. On this business the tax treatment is flow through but the tax deductibility of owner benefits is limited. The major disadvantage is the owner has all the personal liability and because the whole business depends on the owner’s capital then if the proprietor gets out of business the business cease to exist. Normally limited partnership cost more to form because the partners need to hire an attorney to prepare and maintain the partnership agreement. The liability of the limited partners on the partnership debt is limited to the amount of property or money that each partner contributed individually. The disadvantage could be that these companies
Jeanette M Melchor Maldonado
FIN/571-Corporate Finance
March 19, 2014
Prof. Ricardo Rivera-Matos
Business Structure Advice
Good evening John Owner,
To start your business you need to verify and determined some crucial decisions at first. First of all choose the products or services to sell, the markets to sell them and the superior strategies for selling them. How to raise the money to develop your idea with the products and services, acquire all necessary assets and hire the right staff. It is important to be careful and realistic in assessing the opportunities. Don’t overanalyze the opportunities to the point you don’t want to proceed. Many successful entrepreneurs had failed before maybe more than once in their careers but they had learned from their mistakes and used it for the success of their business.
Another imperative decision is to decide which form of organization will work best for your business and what are the pros and the cons for each of them. The basic forms of organization are the sole proprietor, partnership and corporations. Sole proprietorship can be the least expensive type of business structure to start because to start this all you need is a license from local or state government. They can have fewer regulations and all the profits stay with the owner. On this business the tax treatment is flow through but the tax deductibility of owner benefits is limited. The major disadvantage is the owner has all the personal liability and because the whole business depends on the owner’s capital then if the proprietor gets out of business the business cease to exist. Normally limited partnership cost more to form because the partners need to hire an attorney to prepare and maintain the partnership agreement. The liability of the limited partners on the partnership debt is limited to the amount of property or money that each partner contributed individually. The disadvantage could be that these companies
References: Parrino, R. (2012). Fundamentals of Corporate Finance (2nd Ed.). : John Wiley & Sons Inc. Gitman, L. J. (2009). Principles of Managerial Finance (12th Ed.). : Pearson Education. Ryan, B. (2007). Corporate finance and valuation. : Cengage Learning.