Business formation basics
The foremost thing that one needs to decide before undertaking
any business activity is the structure of the corporate. A
business organization can be a sole proprietorship, partnership
or a family undertaking depending on the extent of rights and
liabilities that one wants to design. Sole proprietorship is
perhaps one of the simplest legal structures. It a one man
company. In a partnership, the company is jointly owned by
several partners. When a sole proprietor seeks the capital
investment from another partner, without any further interest of
the latter in the business, it becomes a limited partnership.
The second step is formulation of business plan, though this
may not be required in case of small companies. A business plan
chalks out the entire framework of the activity one proposes to
undertake. It not only brings clarity and goal orientation but
also acts as a positive influence on banks to provide finance.
Finance is the lifeline of any business, be it a profit
oriented organization or a social service undertaking. Depending
upon the size of the business, the magnitude of finance required
may vary. While a small sole proprietorship may raise resources
easily from the owner itself, a large corporation may require
external help. A business may approach banks, investors or
finance companies for the money. While banks usually have tough
rules, a finance company helps to come up with an easy bargain.
After the corporation is finally on its wheels, what becomes
important is effective management. An important thing that is to
be monitored is the direction in which the business proceeds.
The business has to move in the direction and manner as was
planned. Secondly, the relation of the management with its
employees is very important. Unless the employees are motivated
to do their jobs, they cannot give their best to the business.
Proper encouragement can also work wonders. At the same time,
the negative behavior of the employees needs to be discouraged.
The organizations need to strive for a healthy office
environment in order to attain its goals successfully.
Accounting is a tricky area for all the organizations. Every
business needs to adhere with sound accounting purposes to
ensure healthy economic growth. Accounting is required to
calculate the tax, avail the tax benefits, determine
liabilities, and most importantly to calculate the profits and
worth of the business undertaking. Adverse accounting practices
can attract various penalties and can also lead to closure of
the business. Fraud is commonplace with business and accounting,
and needs to be prevented.
Before starting with any business activity, one needs to be
aware of the legal requirements and other related information. A
meticulous preparation is required to make a simple business
undertaking successful.
About the author:
Mansi gupta writes about business formation
.