MGT.400.3
Mar. 11, 2013
Chapter 5 Homework

You Be the Consultant

1. Which form(s) of ownership would you recommend to the Kinseys? Explain. Due to the Kinsey's desire to minimize their exposure to potential legal and financial problems, their choice of ownership should be a corporation. 3. What factors should the Kinseys consider as they try to choose the form of ownership that is best for them? Students should list and briefly discuss the factors that every entrepreneur should consider prior to making a final decision on the form of ownership like: taxes, liability, capital, business goals, management succession and so on.
Discussion Questions 1. What factors should an entrepreneur consider before choosing a form of ownership?
Factors to be considered before choosing a form of ownership include: * Tax considerations – calculate the firm's tax bill under each form of ownership. * Liability exposure - how much personal liability is involved in the ownership form? * Start-up capital required - how much capital does the entrepreneur have and how much will he need? * Control - how much control is involved for each type of business organization? How much is the entrepreneur willing to give up? * Business goals - how large and profitable does the entrepreneur expect the business to be? * Management succession plans - consider smooth transition when passing company to the next generation of buyers. * Cost of formation - some forms are more costly to create. 4. What issues should the articles of partnership address? Why are the articles important to a successful partnership? The major provisions of a partnership agreement include the following: * The name of the partnership * The purpose of the business * The domicile of the business * The duration of the