• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Entity Selection Exercise - Elements of Business Formation

Extracts from this document...


Entity Selection Exercise Elements of Business Formation Maria Cristina Medina University of Phoenix Law/529 -Legal Environment of Business Atty. William Davis July 18, 2005 Introduction Five friends are planning to form a commercial construction business, but with the combined savings they do not have enough assets to start their business. The group came up with a plan of either to obtain bank financing which require them to put collateral; or outside investors who will demand control with no personal collateral. Idea and Vision for the Business It is apparent that if they start up their commercial construction business, they would definitely succeed since majority from those five friends had worked closely with successful homebuilders while one headed the local division of national construction with two years of experience. Although only two of them have experience in running companies and have sizable assets, there is always an alternative to gain their source of capital. However, before they think of financing they should begin writing a business plan, which is a good idea for lenders to oversee how your investment will do in the market. ...read more.


These are the following: 1. Difficulty and cost associated for business creation. As we all know, it is very crucial and it takes a lot of time to complete creation of a particular organization. For that reason, it is essential to review all legal entities and the cost associated in order to make decision that would suit the most for commercial construction business. 2. Transfer of ownership. This is another factor to consider when selecting organizational form for a business. They need to evaluate what obligations owners might have after business dissolution. 3. How to Control decision making in business. Since five friends are going to start the construction business, it would be very hard to make collective decision because of their different points of views. This is the reason why control of making decision is important; to correct approaches in resolving conflict situations in identifying prior opening of a new business. . 4. Personal liability should be chosen for commercial construction. With the group situation, there are two alternatives available: the bank financing and Outside Investment. We all know that business involves money as the major requirement to start a business. ...read more.


These would allow all partners to share control and participate equally in management. Profits and losses are divided among partners in any manner they choose. General Partnership is the best choice since they have management control, and with careful analysis it is obvious that they can also have big financial interest in the company. Conclusion I therefore recommend, S Corporation as the best choice in starting business construction. This is because five friends have different amount of money to invest that would have the flexibility to divide ownership into multiple unequal shares. It would also allow investors together and obtain needed capital for investment, which will reduce bank financing of construction business. I can also say that, three of these friends who worked with successful homebuilders, wherein one of them headed the local division of national construction with two years experience will be able to control managerial decision-making process: shareholders, directors, officers. These three people cannot be held responsible for the debts and obligation of the corporation but only to the amount of their investments. Another key factor is the transfer of ownership, which is easily done by the sale of stock in S Corporation. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level ICT in Business section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level ICT in Business essays


    seek to move forward in relation to ensuring quality, even if they are to remain at their current level of achievement. 17.4 ISO 9000 ISO 9000 is another quality system method witch is important to Marks and Spencer. This service is a reliable supplier of goods and services to use.

  2. Apple Incorporation - Case Analysis

    Clicking on the poster below will provide a greater insight on Apple's culture - think different (Macintosh, 2004). The company logo is a rather odd thing. Who would have considered an apple after it had a bite taken out of it.

  1. Online Business

    I think my website is able to operate with greater freedom to a certain extent. In terms of location my website definitely has the freedom of being located anywhere online. Whereas I would have difficulty paying the high rent for a shop in a busy area and half of my profit would be used to pay the rent.

  2. E-commerce in Business Companies of Bangladesh.

    Facilitate easier access to relevant market information, e.g. prevalent market prices of specific products in different locations. This would help the village people to have better bargaining capacity in selling their produce; f) Provide computer compose and printing facilities at a low cost in rural areas; g) Enable student contact with educational/research institutions and libraries abroad; h)

  1. Describe the key elements of research methodology

    the research project and what was hoped to be achieved before organising observations. * Own analysis of media text - For some research topics it may be appropriate to undertake an analysis of a media text. This would include analysing a text that is closely related to the research topic.

  2. Business Idea

    (Source adapted from www.statistics.gov.uk) This survey which I found on the above website gave information on how many people smoked. There were 2000 people aged 16 and above who took part in the survey. As you can see not many of them actually smoke anymore, so it shouldn't affect the business too drastically.

  1. What Do You Understand By The Term 'Intelligence' & What Are Its Major Elements? ...

    from the identification of the need for data to the final delivery of an intelligence effort, from the identification of the need for data to the final delivery of an intelligence product to a consumer.11 The process may be initiated by requests or requirements for intelligence based on the needs

  2. Business Venture - Dance Club

    Featuring sumptuous leather modular sofas, Italian designed furniture and a deep s**g pile carpet. Individually Hosted service and exclusive wrist brand entry only > The balcony bar - sentry boxes with an army of glowing headlights illuminate their 44h floor party space.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work