Management Decision Regarding the Legal Form of Business Essay

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Abstract After inventing a safer, more user friendly and superior quality household device a firm will be formed to manufacture and distribute my invention. Consideration will be given to the main three legal forms of business in order to make a management decision on which would best suit the needs and limitations of the product and inventor. Limited funds and knowhow are just a sample of the challenges facing the new firm. After comparing the forms of business and all the negative and positive components and the management decision is made, a business plan will start to be developed. It is the belief that not only will the invention hold its own in an already saturated market, but also with the proper business plan, it can be…show more content…
This form of business will allow the owner total control and is the easiest to set up with low operating cost. On the down side, this form of business relies on the knowhow of the owner to run the business and he is totally legally liable for all debt. This could be a problem considering the inventors limited skill set, but could be beneficial considering the low startup cost. This form of business also relies on the owner for the financial resources to expand, and expansion will be necessary to increase the potential for growth.(Holland, 1998, para. 2) The second legal form of business is a partnership. This form of business combines the partners financial and skill resources. On the down side, it requires a partnership agreement and the partners may not always agree on important business topics. The partners are still personally liable for all debt and legal actions. This form of business could answer the skill set issues needed to start the firm. It could also allow for a low startup cost do to the partners polling their money. (Holland, 1998, para. 3) The third legal form of business is a corporation. This business has no legal liability for the investors and the ability to raise unlimited funds by selling stock. This is assuming that there is enough interest in the corporation to inspire people to invest their money. A corporation also has the ability to attract people with the needed skill set. Unfortunately, a corporation also has the

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