BUSINESS

Creating, Financing, and Marketing a Business



Creating, Financing, and Marketing a Business

Pros and cons of the partnership as a form of ownership

Advantages:

Partnership is easier to establish and sustain since risk is distributed. Since it has more than one owner it has the capability and the capacity to raise larger funds and borrow. It does not require the state registration and pay heavy registration fees since it is not a corporation or a limited liability company. The process of filling the income tax returns becomes easy. There is no need to file individual tax returns for entity as well its owners.

Disadvantages

The partners forming the partnership have equal share of debts as well as the liabilities. The profits are shared depending on the degree of capital contribution. The risk of a loss of a personal asset can bring about resistance and influence the decisions that are to be taken in the future. Differences of opinions, death or a dishonest partner can bring about conflicts consequently result in insolvency and a shut down. Decisions need to be shared as the partners have a cautious approach towards risky ventures hence resulting in innovation (www.preservearticles.com).

Funding options for small businesses

Funding options can be classified into 3 categories for small businesses which are:

Grants

Equity Financing

Debt Financing

Grants can be termed as a monetary amount which is attained either via regulatory authorities present or by the state. The small businesses are facilitated by regulatory authorities so that they can attain financial stability as well as act as a catalyst to boost the economy in which it is operating.

Equity financing: Numerous small businesses are funded via financial institutions or in exchange of equity owner ship stake. It ranges from high worth oriented investors to low worth oriented friends and family. These also includes the venture capitalists

Debt Financing: It is the availability of the credit as well as loans for the small businesses. A business is said to have a good reputation if it has a good credit standing and that will aid in borrowing the required credit amount. The cost associated with borrowing has to be compared with the cost associated with equity financing in order to have a cost benefit analysis. They are analyzed on the basis of cash flow, collateral as well as liquidity of the assets owned. If an ample level of confidence is achieved then the bank can provide small businesses with line of ...