Forms of business ownership each have pros and cons that must be evaluated. The key forms are sole proprietorships, partnerships, and corporations. A sole proprietorship is a business owned and managed by one individual who is responsible for all aspects of the business and retains all profits but also bears all risks. A partnership is a business owned by two or more individuals who combine their skills and capital. Partnerships have more capital but profits and liability are shared. A corporation is a legal entity owned by shareholders with transferable shares of ownership. It can raise large amounts of capital through stock sales but profits pass through to shareholders.
When one or more partners leaves the firm and the remaining partners continue to do the business of the firm, it is known as retirement of a partner.
Due to some reasons like old age, poor health, strained relations etc., an existing partner may decide to retire from the partnership.
When one or more partners leaves the firm and the remaining partners continue to do the business of the firm, it is known as retirement of a partner.
Due to some reasons like old age, poor health, strained relations etc., an existing partner may decide to retire from the partnership.
Essential Components of Financial Statement Invensis
A financial statement is an important tool which gives crystal clear information about a company’s financial situation and is helpful in making sound business decisions. Find out the essential components of financial statement and how outsourcing Finance and Accounting services to Invensis Technologies can improve the fiscal aspect of your company.
Invensis Technologies (http://www.invensis.net) is a leading IT & Business Process Outsourcing Firm based in Bangalore, India with more than 15 years of experience. Our customized End-to-End Finance and Accounting(F&A) Outsourcing Services (http://www.invensis.net/outsource-finance-accounting-bpo-services.php) include Tax Preparation Services, Accounting and Bookkeeping, Financial Analysis reporting, Record to Report Services and Payroll Processing Services.
To find out more about our services and benefits of partnering with us, please contact us at sales{at}invensis{dot}net or you can call us from US +1(302)-261-9036 ; UK +44 203 411 0183 ; AUS +61 3 8820 5183 ; IND +91 80 41155233
This presentation aims:
– To understand the purpose of the Statement of Changes in Equity
– To appreciate that the presentation of the Statement of Changes in Equity is dependent on the form of business organization
– To identify the elements of the Statement of Changes in Equity
– To determine the nature of the different equity accounts used by corporations
– To prepare a Statement of Changes in Equity
Discussion of Basic Forms of Business Organization. (Owbership)
Organization → represents a group of people who work together for the achievement of common objective
Essential Components of Financial Statement Invensis
A financial statement is an important tool which gives crystal clear information about a company’s financial situation and is helpful in making sound business decisions. Find out the essential components of financial statement and how outsourcing Finance and Accounting services to Invensis Technologies can improve the fiscal aspect of your company.
Invensis Technologies (http://www.invensis.net) is a leading IT & Business Process Outsourcing Firm based in Bangalore, India with more than 15 years of experience. Our customized End-to-End Finance and Accounting(F&A) Outsourcing Services (http://www.invensis.net/outsource-finance-accounting-bpo-services.php) include Tax Preparation Services, Accounting and Bookkeeping, Financial Analysis reporting, Record to Report Services and Payroll Processing Services.
To find out more about our services and benefits of partnering with us, please contact us at sales{at}invensis{dot}net or you can call us from US +1(302)-261-9036 ; UK +44 203 411 0183 ; AUS +61 3 8820 5183 ; IND +91 80 41155233
This presentation aims:
– To understand the purpose of the Statement of Changes in Equity
– To appreciate that the presentation of the Statement of Changes in Equity is dependent on the form of business organization
– To identify the elements of the Statement of Changes in Equity
– To determine the nature of the different equity accounts used by corporations
– To prepare a Statement of Changes in Equity
Discussion of Basic Forms of Business Organization. (Owbership)
Organization → represents a group of people who work together for the achievement of common objective
What are the different Legal entities under which business can be carried on ...Kronus Law Associates
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Several forms of Business Organisations and their functionality, advantages & disadvantages.
Namely Sole Proprietorship, Partnership, Corporations and LLC.
Unit 2 Part 2 (BBA 104: Business Organisation) according to the syllabus of Kanpur University, Kanpur.
It's a technical and fundamental analysis of US dollar and Bangladeshi taka. Here I can show some technical analysis which will help you to understand the concept of some tools of Technical analysis and there have also Fundamental analysis. so watch it. i think it will help you. Thank you.
Honest Reviews of Tim Han LMA Course Program.pptxtimhan337
Personal development courses are widely available today, with each one promising life-changing outcomes. Tim Han’s Life Mastery Achievers (LMA) Course has drawn a lot of interest. In addition to offering my frank assessment of Success Insider’s LMA Course, this piece examines the course’s effects via a variety of Tim Han LMA course reviews and Success Insider comments.
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Phyto-Pharmacological Screening, New Strategies for evaluating
Natural Products, In vitro evaluation techniques for Antioxidants, Antimicrobial and Anticancer drugs. In vivo evaluation techniques
for Anti-inflammatory, Antiulcer, Anticancer, Wound healing, Antidiabetic, Hepatoprotective, Cardio protective, Diuretics and
Antifertility, Toxicity studies as per OECD guidelines
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
Embracing GenAI - A Strategic ImperativePeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
The Roman Empire A Historical Colossus.pdfkaushalkr1407
The Roman Empire, a vast and enduring power, stands as one of history's most remarkable civilizations, leaving an indelible imprint on the world. It emerged from the Roman Republic, transitioning into an imperial powerhouse under the leadership of Augustus Caesar in 27 BCE. This transformation marked the beginning of an era defined by unprecedented territorial expansion, architectural marvels, and profound cultural influence.
The empire's roots lie in the city of Rome, founded, according to legend, by Romulus in 753 BCE. Over centuries, Rome evolved from a small settlement to a formidable republic, characterized by a complex political system with elected officials and checks on power. However, internal strife, class conflicts, and military ambitions paved the way for the end of the Republic. Julius Caesar’s dictatorship and subsequent assassination in 44 BCE created a power vacuum, leading to a civil war. Octavian, later Augustus, emerged victorious, heralding the Roman Empire’s birth.
Under Augustus, the empire experienced the Pax Romana, a 200-year period of relative peace and stability. Augustus reformed the military, established efficient administrative systems, and initiated grand construction projects. The empire's borders expanded, encompassing territories from Britain to Egypt and from Spain to the Euphrates. Roman legions, renowned for their discipline and engineering prowess, secured and maintained these vast territories, building roads, fortifications, and cities that facilitated control and integration.
The Roman Empire’s society was hierarchical, with a rigid class system. At the top were the patricians, wealthy elites who held significant political power. Below them were the plebeians, free citizens with limited political influence, and the vast numbers of slaves who formed the backbone of the economy. The family unit was central, governed by the paterfamilias, the male head who held absolute authority.
Culturally, the Romans were eclectic, absorbing and adapting elements from the civilizations they encountered, particularly the Greeks. Roman art, literature, and philosophy reflected this synthesis, creating a rich cultural tapestry. Latin, the Roman language, became the lingua franca of the Western world, influencing numerous modern languages.
Roman architecture and engineering achievements were monumental. They perfected the arch, vault, and dome, constructing enduring structures like the Colosseum, Pantheon, and aqueducts. These engineering marvels not only showcased Roman ingenuity but also served practical purposes, from public entertainment to water supply.
June 3, 2024 Anti-Semitism Letter Sent to MIT President Kornbluth and MIT Cor...Levi Shapiro
Letter from the Congress of the United States regarding Anti-Semitism sent June 3rd to MIT President Sally Kornbluth, MIT Corp Chair, Mark Gorenberg
Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
harassment and intimidation at the Massachusetts Institute of Technology (MIT). Failing to act decisively to ensure a safe learning environment for all students would be a grave dereliction of your responsibilities as President of MIT and Chair of the MIT Corporation.
This Congress will not stand idly by and allow an environment hostile to Jewish students to persist. The House believes that your institution is in violation of Title VI of the Civil Rights Act, and the inability or
unwillingness to rectify this violation through action requires accountability.
Postsecondary education is a unique opportunity for students to learn and have their ideas and beliefs challenged. However, universities receiving hundreds of millions of federal funds annually have denied
students that opportunity and have been hijacked to become venues for the promotion of terrorism, antisemitic harassment and intimidation, unlawful encampments, and in some cases, assaults and riots.
The House of Representatives will not countenance the use of federal funds to indoctrinate students into hateful, antisemitic, anti-American supporters of terrorism. Investigations into campus antisemitism by the Committee on Education and the Workforce and the Committee on Ways and Means have been expanded into a Congress-wide probe across all relevant jurisdictions to address this national crisis. The undersigned Committees will conduct oversight into the use of federal funds at MIT and its learning environment under authorities granted to each Committee.
• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
• The Committee on Ways and Means has been investigating several universities since November 15, 2023, when the Committee held a hearing entitled From Ivory Towers to Dark Corners: Investigating the Nexus Between Antisemitism, Tax-Exempt Universities, and Terror Financing. The Committee followed the hearing with letters to those institutions on January 10, 202
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It is possible to hide or invisible some fields in odoo. Commonly using “invisible” attribute in the field definition to invisible the fields. This slide will show how to make a field invisible in odoo 17.
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Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
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The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
For more information, visit-www.vavaclasses.com
Instructions for Submissions thorugh G- Classroom.pptxJheel Barad
This presentation provides a briefing on how to upload submissions and documents in Google Classroom. It was prepared as part of an orientation for new Sainik School in-service teacher trainees. As a training officer, my goal is to ensure that you are comfortable and proficient with this essential tool for managing assignments and fostering student engagement.
2. Each form of business ownership has
advantages and disadvantages.
If you are planning to go into any type of
business, you need to review these pros and
cons and determine which form of
ownership meets your needs.
WHAT TYPE OF BUSINESS IS
RIGHT FOR YOU?
3. Capital Requirements
The amounts of funds necessary to finance the operation.
Time Requirements
The time needed to operate the business and provide guidance
to employees.
Tax Liability
What taxes a business must pay to various
governments on earnings of business.
What Factors Should We Consider?
4. What Factors Should We Consider?
Management Abilities
The skills needed to plan, organize and control the business.
Risk
The amount of personal property a person is willing to lose
by starting a business.
Control
The amount of authority the owner exercises.
5.
6. Sole Proprietorship
A business that is owned and usually
managed by one person/individual.
Partnership
A business owned by two or more people.
Corporation
A legal entity with authority to act and have
liability separate from its owners.
FORMS OF BUSINESS
7. SOLE PROPRIETORSHIP
A business that is owned and usually
managed by one person/individual.
The person may receive help from
others in operating the business, but
is the only boss: the sole proprietor
is the company.
■ Small Independent Retail Shops
■ Hardware store
■ Bakery
■ Restaurant
■ Tea-stall
8. SOLE PROPRIETORSHIP
The Sole Proprietor often aided by one or
two employees, operates a shop that
frequently caters to a group of regular
customers.
The Capital (money) needed to start and
operate the business is normally provided by
the owner through personal wealth or
borrowed money.
The sole proprietor is usually an active
manager, working in the business. He or she
controls the operations, supervises the
employees and makes the decisions.
The sole proprietor usually accounts for the
success and failure of the business.
9. SOLE PROPRIETORSHIP: FEATURES
Capital provided by one
through personal wealth or
borrowed money
Should be an active manager
Control the operation
Supervise the employees
Make and take the decisions
Should have good
managerial ability
10. SOLE PROPRIETORSHIP: ADVANTAGES
Easy of Starting and Ending the Business
All one has to do to start a sole proprietorship is buy or lease the
needed equipments and put up some announcements saying s/he is in
business. It is just as easy to get out of business; s/he simply stops.
Being Your Own Boss
Working for others simply does not have the same excitement as
working for own-self—at least, that’s the way sole proprietorship feel.
11. SOLE PROPRIETORSHIP: ADVANTAGES
Control
The owner has the freedom to make the final decisions on any sector.
Secrecy
As the owner is one there is no change or limited changes to be shared of
the business secret information.
Pride of Ownership
People who own and manage their own businesses are rightfully proud of
their work. They deserve all the credit for taking then risks and providing
needed goods or services.
12. SOLE PROPRIETORSHIP: ADVANTAGES
Sole Participation in Profits and Losses
All profits earned or losses incurred by operating the
business are to be shared by the Individual.
Retention of Company Profit
Other than the joy of being boss, there is nothing like
the pleasure of knowing that one can earn as much as
possible and not have to share that money with
anyone.
Tax Breaks
A major advantage of the proprietorship is that the
businesses pays no income tax. A Corporation pays
taxes on profits; its owners, the shareholders pay taxes
on dividends. Whereas, a sole proprietor pays no tax
on business profits, instead the person is taxed as an
individual on all his/her income earned from the
business.
13. SOLE PROPRIETORSHIP: DISADVANTAGES
Few Fringe Benefits
As the owner is the boss, s/he loses the fringe
benefits that often come from working for
others. (Health insurance, disabilities
insurance, sick leave and vacation pay)
Limited Growth
Expansion is often show since a sole
proprietorship relies on its owner for most of
its creativity, business know-how and
funding.
Limited Life Span
Death, Illness, bankruptcy or retirement of the
owner terminates the proprietorship.
14. SOLE PROPRIETORSHIP: DISADVANTAGES
Unlimited Liabilities
The responsibility of business owner for all the debts of
the business. Obligations of investors to use personal
assets, when necessary to pay off the debts to business
creditors. He/She has the risk of personal losses.
Limited Financial Resources
Funds available to the business are limited to the funds
that the one (sole) owner can gather. Therefore funds
are limited to personal wealth.
Limitations in Managerial Ability
All businesses need management; that is someone must
keep inventory records, accounting records, tax records
and so forth. Many people who are skilled at selling
things or providing a service are not skilled in keeping
records. Sole proprietors may have no one to help.
15. SOLE PROPRIETORSHIP
The sole proprietor is usually an active manager, working in the
business. He or she controls the operations, supervises the
employees and makes the decisions.
The sole proprietor who is the owner usually accounts for
the success and failure of the business.
16. PARTNERSHIP
A business owned by two or more people.
An Association of two or more persons to carry on as co-owners of a business
for profit.
A partnership can be based on a written contract or a voluntary and legal oral
agreement. The law regards individual as partners when they act in such a way
as to make people believe they operate a business together.
18. TYPES OF PARTNERSHIP:
GENERAL PARTNERSHIP
A Partnership in which at least one
partner has unlimited liability; a
general partner has authority to act
and make binding decision as an
owner. Partners generally share
profits and losses according to a plan
specified by agreement between them.
The general partner may be liable for
all the debts of the business.
19. TYPES OF PARTNERSHIP:
LIMITED PARTNERSHIP
A Partnership with at least one general partner
and one or more limited partners who are liable
for losses only up to the amount of their
investment.
The general partners arrange and run the
business, while the limited partners are investors
only. Investors receive special tax advantages and
protection from liability.
Limited partners legally may have no say in
managing the business. If there is any violation,
the limited partnership status is dissolved.
20. TYPES OF PARTNERSHIP:
MASTER LIMITED PARTNERSHIP [MLPs]
A new form of partnership, the master limited
partnership (MLP), looks much like a
corporation in that it acts like a corporation
and is traded on the stock exchanges like a
corporation, but it is taxed like a partnership
and thus avoids the corporate income tax. Two
well-known MLPs are Burger King and
Perkins Family Restaurants.
21.
22. TYPES OF PARTNERSHIP:
JOINT VENTURES
Sometimes a number of individuals and businesses join
together in order to accomplish a specific purpose or
objectives or to complete a single transaction.
A joint venture (often abbreviated JV) is an entity
formed between two or more parties to undertake
economic activity together. The parties agree to create a
new entity by both contributing equity (capital), and
they then share in the revenues, expenses, and control of
the enterprise. The venture can be for one specific
project only, or a continuing business relationship such
as the Fuji Xerox joint venture.
23. PARTNERSHIP CONTRACT
Sound business practice dictates that a partnership agreement be written and signed,
although it is not a legal requirement. Such a contractual agreement is called Articles of
Partnership.
Written articles of partnership can prevent or lessen misunderstandings at a later date.
Oral partnership agreements, though quite legal, tend to be hard to recreate and are open
to misunderstandings. Written articles of partnership provide a proof of an agreement.
24. PARTNERSHIP CONTRACT
Name of business partnership
Type of business
Location of the business
Expected life of the partnership
Names of the partners and amount of each one's
investment
Procedure for distributing profits and covering
losses
Amounts that partners will withdraw for services
Procedure for withdrawal of funds
Duties of each partner
Procedures for dissolving the partnership
25. PARTNERSHIP: ADVANTAGES
More Capital
In the sole proprietorship, the amount of capital is limited to personal wealth and the credit of the
owner. But in a partnership business, when two or more people pool their money and credit, it is
easier to pay the rent, utilities, and other bills incurred by a business.
Combined Managerial Skills
In a partnership, people with different talents and skills may join together to form a business. It is
simply much easier to manage the day-to-day activities of a business with carefully chosen partners.
Partners give each other free time from the business and provide different skills and perspectives. 0
26. PARTNERSHIP: ADVANTAGES
Ease of Starting
As it involves a private contract contractual
agreement, a partnership is fairly easy to start. It is
nearly as free from government regulation as a sole
proprietorship.
Clear Legal Status
The legal outline for partnerships have been
established through the court. The questions of rights,
responsibilities, liabilities and partner duties have
been covered. Therefore the legal status of a
partnership is clearly visible. Lawyers can provide
legal advice about the partnership issues.
Tax Advantages
The partnership has some potential tax advantage over
a corporation. In partnership has some proprietorship,
the owners pay taxes on their business earnings. But
the partnership as a business does not pay income tax.
27. PARTNERSHIP: DISADVANTAGES
When two people agree on anything, there is
the possibility of conflict and tension.
Partnerships have caused splits among
families, friends, and marriages.
Unlimited Liability
Each general partner is liable for the
debts of the firm, no matter who was
responsible for causing those debts. You
are liable for your partners’ mistakes as
well as your own. Like sole proprietors,
general partners can lose their homes,
cars, and everything else they own if the
business loses a lawsuit or goes
bankrupt.
Instability
If a partner dies or withdraws from the
business, the partnership is dissolved.
28. PARTNERSHIP: DISADVANTAGES
Disagreements Among Partners
Disagreements over money are just one example of
potential conflict in a partnership. Who has final
authority over employees? Who hires and fires
employees? Who works what hours? What if one
partner wants to buy expensive equipment for the firm
and the other partner disagrees? Potential conflicts are
many. Because of such problems, all terms of
partnership should be spelled out in writing to protect
all parties and to minimize misunderstandings.
Decisions made by several people (Partners) are often
better than those made by one, but when there are two
or more people deciding on some aspect of the
business can be dangerous. Power and authority are
divided and the partners will not always agree on each
other. As a result poor decision making and more time
consuming can occur.
29. PARTNERSHIP: DISADVANTAGES
Investment withdrawal difficulty
A person who invests money in a partnership may have a
hard time withdrawing the investment. It is much easier
to invest in a partnership than to withdraw. Sure, you can
end a partnership just by quitting. However, questions
about who gets what and what happens next are often
very difficult to solve when the partnership ends.
Limited Capital Availability
The partnership may have an advantage over the sole
proprietorship in the availability of capital, but it does not
compare to a corporation in ability to raise capital.
Partners sometimes have limited capabilities and cannot
compete in businesses requiring large amount of capital.
The amount of capital a partnership can raise depends on
the personal wealth of the partners and their credit
ratings.
30. SYNDICATES
Two or more businesses joined together to accomplish specific business goals; a popular form in
underwriting large amounts of corporation stocks.
- It engages in financial transactions.
- Unlike a Joint Venture, a syndicate need not to be dissolved after the transaction is
completed.
- Member of syndicate can sell their own interest to buyer, the remaining partners cant say
anything.
31. Some industries such as automobile
manufacturing, computer
manufacturing, oil refining and natural
gas production require millions of
dollars to operate a business.
Typically such vast amount of money
are put together by attracting numerous
investors.
The unincorporated forms of business –
sole proprietorship and the partnership
do not attract investors who do not want
to make decisions or to be actually
involved in managing the firm.
CORPORATION
32. A legal entity with authority to act and have liability separate from its
owners.
In the eyes of law, the corporation is an artificial being, invisible and
intangible. It has the legal rights of an individual; it can own property,
purchase goods and services and sue other persons or corporation.
CORPORATION
33. Basically a vast amount of
money put together to attract
investors
The corporation owners spread
over a wide geographical area
can hire professional managers
to operate the business
It has legal right, purchase
property, goods and services.
CORPORATION
34. Charter
A state’s written agreement giving a corporation
the right to operate as a business. The state-issued
document authorizing its formation.
The individuals forming the corporation are called
its Incorporators.
Domestic Corporation
An enterprise organized under the laws of one state
or country and doing business within the state or
country.
Foreign Corporation
A business incorporated in one state or country and
doing business in another state or country.
FORMING A CORPORATION
35. Factors involved to start a corporation:
To form a corporation, any country needs at least 3 persons.
The applicants fill out an application form for a Charter (Articles of Incorporation)
The form is then reviewed by the appropriate government officials.
After granting the charter, the incorporators and all subscribers or the owners of the
stock of the business meet and elect the Board of Directors.
FORMING A CORPORATION
36. Factors involved to start a corporation: (Contd.)
They also approve the bylaws of the corporation.
The Board of Directors then meets to select the professional managers and to make any
other decisions needed to start the business.
The corporation has relationship with shareholders, creditors, customers, and employees.
The actual owner of corporation are shareholders who invest money in the business.
The manager of the corporation decide what property to purchase, when and whom to
hire, where to borrow needed funds.
FORMING A CORPORATION
39. The Corporation Chartered by a
state as a separate entity
Professional
Managers
Property
(Equipment, Real
Estate, Inventory,
Buildings
People
(Supervisors,
Labourers, Clerks,
Sales Personnel)
Customers (Buyers
of goods and
services)
Shareholders
(Investors of money)
Creditors (Banks,
Bondholders, other
businesses)
Is Owned By
Owes
Recruits &
Hires
Owns
Is Run By
Sells To
CORPORATION: AT A GLANCE
40. Limited Liability
A major advantage of corporations is the limited liability of owners.
Corporations in England and Canada have the letters Ltd. after their
name, as in British Motors, Ltd. The Ltd. stands for “limited liability,”
probably the most significant advantage of corporations. A person
investing funds in a corporation receives shares of stocks and becomes
an owner. In a corporation, the liability for the shareholder equals the
amount of funds invested. Thus if the business is forced to liquidate each
owner loses only the amount of money, he or she has invested.
Skilled Management Team
The Board of Directors has the duty of hiring professional managers and
the owners delegate their power of operating business to these managers.
Professional managers are trained and experienced executives. The
professional managers may own shares of stock in the business but not
usually not enough to control the corporation.
CORPORATION: ADVANTAGES
Most people are not willing to risk everything to go into business. Yet for a business to grow and
prosper and create economic opportunity, many people would have to be willing to invest their
money in it. One way to solve this problem is to create an artificial being, an entity that exists
only in the eyes of the law—a corporation. Let’ s explore some of the advantages of
corporations:1
41. Greater Capital Base
To raise money, a corporation can sell ownership (stock) to anyone who is
interested. This means that millions of people can own part of major
companies like IBM, Xerox, and General Motors and smaller companies as
well, such as JobDirect.com. Corporations may also find it easier to obtain
loans since lenders find it easier to place a value on the company when they
can review how the stock is trading. Corporations, however can attract
capital from a large number of investors by selling shares of stocks.
Transfer of Ownership
The Shareholders have the right to sell their shares of a corporation’s stock
to whomever they like, barring a legal restriction on some closed
corporations. These shares of ownership can be sold whenever the
shareholder desires and at the price the buyer is willing to pay. Thus
shareholders can freely buy and sell shares of stock. The investment flows
easily and is not frozen. This right to sell shares of stock gives corporations
the ability to attract large number of shareholders.
CORPORATION: ADVANTAGES
42. Stability
Because corporations are separate from those who
own them, the Shareholders’ death, retirement or
sale of stock need not dissolve the business. The
corporation’s policies may be hampered by the
sale of large blocks of stock, but business will go
on. Nor will the death or retirement of the
President of the board or Chief Executive Officer
stop the corporation from doing business.
Legal-Entity Status
A Corporation can purchase property, make
contracts or sue and be sued in its corporate name.
These characteristics distinguish it most clearly
from other forms of business organizations.
CORPORATION: ADVANTAGES
43. Difficulty and Expense of Starting
Starting a corporation involves applying for a Charter
from a state. Each state has its own set of laws; these
must be considered before deciding where to
incorporate. Fees and other expenses to start the
business need to be considered.
Initial Cost
Incorporation may cost thousands of dollars and involve
expensive lawyers and accountants.
Multiple Taxation
Corporate income is taxed twice. First the corporation
pays tax on income before it can distribute any to
stockholders. Then the stockholders pay tax on the
income (dividends) they receive from the corporation.
CORPORATION: DISADVANTAGES
44. Lack of Control
The individual shareholder has little
control over the operations of the
corporations except to vote for a line up of
individuals for the Board of Directors. The
buying and selling of shares of stock is the
only real control owner has.
Possible Conflict with Board of
Directors
Some conflict may rise if the stockholders
elect a board of directors that disagrees
with the present management.
Difficulty of Termination
Once a corporation is started, it’s relatively
hard to end.
CORPORATION: DISADVANTAGES
45. Lack of Personal Interest
In most corporations except the small ones management
and ownership are separate. This separation can result in a
lack of personal interest in the success of the corporation.
Credit Limitations
Banks and other lenders have to consider the limited
liability of corporations. If a corporation fails, its creditors
can look only to the assets of the business to satisfy
claims.
Lack of Secrecy
A corporation must provide each shareholder with an
annual report and other reports. These reports present data
on sales volume, profit, total assets and other financial
matters. Public disclosure of these data enables
competitors and other outsiders to see the corporation’s
financial condition.
CORPORATION: DISADVANTAGES
46. Private
Attempts to earn a satisfactory profit
Public
Owned and run by the government
Closed
Stock held by only a few owners and not actively sold on the stock market
Open
Stock held by numerous people and actively sold on the stock market. Eg.
Beximco Pharmaceuticals Ltd.
Municipal
Cities and townships that carry out business. Government owned Corporations.
Eg. Dhaka City Corporation, Chittagong City Corporation, etc.
TYPES OF CORPORATION
47. Domestic
Incorporated in one state or country and doing business within that state or country. Eg. AKIJ Group, PHP Group
Foreign
Incorporated in one state or country and doing business in another state or country. Unilever Bangladesh Limited
incorporated in UK.
Alien
Incorporated in one nation and operates in another state or country.
Eg. Coca Cola (COKE) --- Abdul Monem Limited.
Nonprofit
Service organization incorporated for limited-liability status. Eg. Save the Children, CARE, Anjuman-e-Mufidul Islam, etc.
Single-Individual
Individually owned business incorporated to escape high personal income tax rate.
TYPES OF CORPORATION
48. Combining two or more business
enterprises into a single entity.
Joining together of two
corporations.
Types of Mergers
Horizontal Merger
Vertical Merger
Conglomerate Merger
MERGERS
49. Horizontal Merger
A merger involving competitive firms in the same market.
Example: A Garment Manufacturer merging with another Garment Manufacturer.
Vertical Merger
A merger in which a firm joins with its suppliers.
Example: A Cement Manufacturer (Lafarge Surma Cement) merging with the stone
crushers of Meghalaya, India.
Conglomerate Merger
A merger involving firms selling goods in unrelated markets.
Example: Automobile Manufacturer merging with a Construction Firm.
TYPES OF MERGERS
50. An Organization in which people collectively own and
operate a business in order to compete with bigger
competitors.
Take approval from Social Welfare Department.
Group of people doing business for their own benefit
or welfare.
Only the members get the benefits.
Profits are distributed among the members.
Milk Vita
Dairy Coperatives
Kingshuk Co-operative Society Ltd.
Dhaka Club
Gulshan Club
COOPERATIVES