Marvin is planning to open a fabric dyeing business. He plans to do large scale dyeing of both fabric bolts and ready-to-wear garments. The source of business will be garment makers and cleaners. He has worked in this part of the fashion industry and knows how much capital he will need to buy the equipment required for this specialized activity.
He has some cash, and he is trying to decide whether to incorporate or to form a partnership. What would you say to him about the major advantages and disadvantages of chartering a corporation rather than forming a partnership?
2007-08-25 16:22:06 · 3 answers · asked by Anonymous in Business & Finance ➔ Corporations
PARTNERSHIPS
ADVANTAGES:
Not very difficult to form....
A method of raising capital....
Partners are boss....
Abilities are complemented
DISADVANTAGES:
Finding suitable partners....
Disagreements....
Partnership agreement-Legal fees....
Authority of partners undefined....
Unlimited liability....
Difficult to dissolve....
Terminates with death....
Profits shared
CORPORATIONS
ADVANTAGES:
A way of raising capital....
Easy ownership transfer....
Limited liability....
Continues until terminated....
Possible tax advantage....
Optional use of sub-chapter S
DISADVANTAGES:
Incorporation costs-Legal fees....
Charter restrictions....
Legal requirements-Reports, records....
More government control....
Franchise tax....
Profits taxed twice
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2007-08-25 21:55:36 · answer #1 · answered by Sandy 7 · 0⤊ 0⤋
using a corporate structure would make it easier to raise capital either from banks in the form of loans, or through shareholder investors investing in equity. A partnership can also allow for shareholders or multiple partners, but in the case of a partner dying, for example, the entire partnership is dissolved and the assets will be frozen.
debt and raised investor money is vital in a equipment dependent business. marvin should keep his cash as working capital or emergency funds or risk what puts most businesses out, cash flow shortages.
2007-08-25 16:30:29 · answer #2 · answered by slara512 2 · 0⤊ 1⤋
Call of duty games don't really take skill to level up so its stupid to buy this already and I could get 46 as a highest skill in halo with my eyes closed. And the other two are just plain stupid and can care less. My offer is $1 with some pocket lint.
2016-05-18 00:00:39 · answer #3 · answered by phyliss 3 · 0⤊ 0⤋