Question

Please submit the completed assignment in the course room by Midnight Sunday EST 1. What are the various forms of business organizations? Specify the form of business that is more advantageous according to each the following criteria. Explain your answers. al income taxes b) Ease of raising capital Cost of setup and organizational requirement d) Liability of owners e) Continuity of the business Transferability of ownership 2. What are some actions that stockholders can take to ensure that management's and stockholders interests are aligned? 3. Explain the concept of "Cash flow is what matters":

Answer 1

1. Business organisation is the mots important choice you will make regarding your company. There are 4 main forms if busines organisation that is Sole proprietorship, Partnership, Corporation or Limited libility company (LLC).
Sole Proprietorship- The simplest and most common form of business ownership, it is a business owned and run by someone for their own benifit.
Partnership- Owner and the investor invest in the company are partnership.
Corporation- It is for tax purpose, seperate entities and are conidered a legal person. This mean, among other things the profit generated by a corporaton are taxed as the "personal income" of the company.
Limited Liability Company(LLC)- LLC provides owners with limited liability while providing some of the income adventages of partnershipand corporation are combined in an LLC.

a) Income Taxes- Corporation Tax consider a seperate legal entity created by a state filling. Income tax earned by a corporation is normally taxed at the corporate level using the corporate income tax rates. Corporation income is alos subject to what is called "double taxation" When the income of the business is distributed to the owner i the form of dividends, beacouse dividend are taxable. Tax is paid first by the corporation on its income and then again by the owners on the dividend recived. If the owner draws a salary from the corporation that salary is also subject to income tax.
b) Ease of rising capital- Corporation has flixiblity in rising capital through the sale fo stock in Stock market.
c) Cost of setup and organational- In my point of view Sole proprited is easy to form and easy to dissolve also, establishing sole properiter can be simple as printing up business card or hanging a sign annoucuing the business. Typically, there are low startup cost and low operational cost.
d) Liability of owners- In LLC the owners have limited liability, the owners personal assets are protected from judgment and defaults on company debts.
e) Continuity of the business- Corporation has the capability for the countuniation of the business without the owner as itshareholder are the owners
f) Transferibilty of ownership- In partnership and in corporate both of the business forms have the smooth transferibilty of ownership.

2. A stock holder is an instution or an individual who is the owner o a single or more stock of a company. since they own the company they have the rights. like Stockholderds have a right to change the acitvites of the comapany to ensure the overseeing of profit maximization, aligning them with the management. They may vote for decision execution such as firing of a manager. The stockholder may issue threats of arm acquistion to the management and fire the managers whose perfomence is poor. Thus ensuring that the managers oversee the intrest of stockholders.

3. The statment of cash flows or the cash flow statment is a financial statment that summarizes the amount of cash and cash equivalents entering and leaving a company. The cash low statment measures how well a company manages its cash position, meaning how well the comapny generates cash to pay its debt obilgation and fund its operating expence.the cash flow statment complements the balance sheet and income statment and is a mandatory part of a company financial reports.