Assignment Questions On Business Structures

Requires additional training cost, space, business strategy and building customers recognition, hire professional help which may cause additional fund or used available line of credit

Part II: Make your recommendation as to what form of organization you believe will be best and be sure to explain the reasoning for your choice.

As shown in the ratios chart, working capital has increased by $13M. Maturities of short-term investments and cash flow from operations are projected to be sufficient to sustain the company’s overall financing needs, including capital expenditures. The following corporate strategic plan identifies a project that needs financial backing.

There is an Infinite room for growth going into the future as there is not a specified limitation to the number of members able to join the business venture

Detail your plans are for expanding your business. What is your plan to grow your company?

As the organization grows, the agency will have to increase employees, create assistant management positions, marketing positions as well as other support staff and at that time if the capital is not available the agency will have to find additional capital to cover expansion expenses, or the agency will find other financing options in the area of government grants, economic stimulus grants, and business expansion

· * From the scenario, take a position for or against TFC’s decision to expand to the West Coast. Provide a rationale for your response in which you cite at least two (2) capital budgeting techniques (e.g., NPV, IRR, Payback Period, etc.) that you used to arrive at your decision.

2. Once you have estimated the start-up needs for this business, determine the best financing

When contemplating expansion and growth, it is imperative to understand the advantages and disadvantages as they relate to funding. Internal financing, or using profits for new investments, is advantageous as it is available immediately, there is no associated interest, there aren’t any restrictions imposed by outside parties, and overall, grants flexibility. However, it can be disadvantageous, as it is not tax-deductible, capital is not increased, and there is more available capital available on the outside market.

E. Describe the legal form of the business and indicate some of the advantages/disadvantages of the form.

* Using the same scenario, determine how you would finance a five-fold expansion of your company. Explain your rationale.

To form a corporation with limited liability, there are no restrictions on the number of members who can be involved. One member can start the business and investors can become members after the business has been established. With the guarantee that members’ potential loss is no more than what was originally invested. In addition, if an individual decides to dissolve the affiliation, the transfer of ownership is not difficult because the member only needs to sell his or her stock. However, the disadvantages are not too severe that one would shy away from the thought of forming a small business.

Would you like to share some ideas and details regarding about the business you intend to establish?

The aim of this report is provide Mrs Needle with advice on how to raise finance, what legislation she should look out for and also to give a discussion on the risks she can expect her business to face and how to reduce these risks. In order for me to provide a more detailed report I feel it is necessary for me to first give Mrs Needle my opinion on the most appropriate legal structure for her business, now that she has decided to no longer operate as a sole trader. Choosing the appropriate business structure is very important as it directly effects the legislation you must comply with, specifically the paperwork required to get the business started, personal tax responsibilities and individual accountability for liabilities of the business.

Those legal structures are: sole trader,partnership,partnership with limited liability(LLP),private limited company (LtD) and public limited company (PLC).