Changes in Organization of F&S Systems Design

1184 WordsJan 26, 20185 Pages
The management’s consideration to change from partnership to corporate form of business organization seem like a profitable idea for F & S Systems Design. Such transformation will affect many aspects of their business, including how profits and liabilities are divided, and how taxes are paid. Forming a corporation offers several advantages over partnership. As defined, a corporation is owned by shareholders, who profit from the company’s gains. A partnership is owned by two or more people who divide the business’ profits. A corporation involves the most paperwork and expenses to set up, and is the most complex form of business, but it offers certain rewards than partnership. Listed below are the key advantages and disadvantages of corporations and partnerships, and the steps to incorporate in the state of Texas. Advantages to forming a corporation over partnership are: Liability Protection: One of the most important reasons for forming a corporation is the limited liability protection provided to its owners. Corporations are separate legal entities from the people who own them, therefore Shareholders are prevented, and would not loose personal assets due to a company's debts or legal issues. Disadvantages of Partnership: Owners of partnerships are held responsible for all company debts and legal responsibilities, and are subject to losing personal assets if the company is caught up in costly legal situations or goes bankrupt. Access to Funds: It is easier for

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