Essay Title: 

Prepare a report that identifies and describes at least four alternative forms of business organization that might be used by the Far Horizon.

March 24, 2016 | Author: | Posted in it management, technology

Forms of Business Organization

The organizational form of business is important in many ways

It outlines the opportunities to generate additional resources

Determines the span of control

Ensures partners (including possible investors , suppliers and different governmental agencies ) trust

Determines the liability of the owners

The Case of Far Horizon is quite difficult . On one hand , the manager has outgoing plans for expansion of its business . The creation of convenience center demands serious investment . Calculating the revenue from Restaurant and Lounge and subtracting all the expenses (including taxes and legal [banner_entry_middle]

fees , I ‘ve come up to the net income of approximately 20000 . The necessary investment into convention center is 338000 which is 17 times more than Far Horizon is able to provide on its own Thus , the necessity in additional financial resources is very vital Taking this consideration into account , to incorporate business will be quite appropriate as a good source to generate money

However , it is also important to notice that Far Horizon has no debt and has been a profitable organization for years . Moreover , his owner has a good managerial experience and he was the one running the organizational successfully . Thus , creating a Corporation will mean giving a part of managerial responsibilities to others , which can be quite disappointing , considering that the owner of Far Horizon has its own proven management model

Therefore , considering owner ‘s managerial experience , effort and devotion to own business on one hand , and the vital necessity for additional financial resources , I would recommend to remain Restaurant and Lounge a sole proprietorship , but make future Convenience center a Private Corporation . Such an organizational form will

Help to generate necessary sum of money

Remain in control , since public offering will not be provided . This makes the situation more predictable

Private Corporation can be transferred any time into Public one

Moreover , private incorporation will ensure that the owner doesn ‘t endanger current prosperity and success of Restaurant and Lounge , since no additional money will be withdrawn from those two business units Furthermore , it can also protect owner from excessive tax expenses However , the very main advantage of incorporation is limited liability It means that restaurant and lounge will not suffer if Convenient Center gets losses . Thus , incorporating Convenience Center will also mean

avoiding financial and managerial risks

getting additional experience from partners

possibility for expansion

Generally , each of four main business organization forms has the following advantages and disadvantages

1 .Sole proprietorship is an independent business , when everything is concentrated in one hand

Advantages include

easy formal procedures

wide span of control

the absence of necessity for huge start-up investment capital

relatively low taxes

The main advantage for Far Horizon is that the owner will solely control its business as he ‘s done before

Main disadvantages

unlimited liability (danger for Far Horizon ‘s owner to lose everything in case of failure – not just Convenience Center , but Restaurant and Lounge as well

limited opportunities to raise money (this is especially important for Far Horizon considering substantial necessity for… [banner_entry_footer]

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