Business Corporations Versus Sole proprietorships – Which is Best?
The most important asset for any business is its employees. It is extremely difficult to keep good people motivated and give them the right direction and tasks for their skills. Busy executives cannot spend as much time on office politics as they could and this often leads to resentment and ill feelings on the part of their employees. But there are ways to motivate your employees even if they have to work harder than normal because you can still find great ways to motivate your staff without having to compromise their own priorities.
An opportunity cost is simply something which is given away in order to perform something else. For instance this can be when an enterprise has to take on two separate premises, they may face opportunity costs due to the fact that they don’t take on the second premises in order to create another department. Another example is when a company has 5,000 employees and has to decide between investing the money in a new advertising campaign for the company or better training its staff, they have to weigh up all of these factors in order to see what will best benefit the business, in short they have to weigh up ROI (Return on Investment).
Intellectual property rights cover any intangible assets of a business enterprise. This includes such things as trademarks, domain names, slogans, design patterns or blueprints, the list goes on. When any one of these assets is owned by someone else they have the legal right to sue the business enterprise for stealing it. So for businesses which are looking to protect their intellectual property from rivals, a strong company is the one which will protect its intellectual property.
In order to make it easier for businesses to protect their own legal rights, business corporations have been created under the main article of law as a separate entity from the main body of the corporation. Each separate piece of commercial law owns and has the rights to its own intellectual property, so if the business corporation is sued, the main corporation can still offer proof of indemnity to the people that are being sued, so all claims brought against the company have to pass through the legal rights of the corporation. So this means that if there is a person who is suing the company, all that the company has to do to show that it cannot be sued because of its corporate status, is to show that it is not a separate entity but rather is an entity which is entirely owned by the person suing it. This makes the corporation a legal entity in the eyes of the courts, and it is therefore safe to operate and continue as usual.
Another advantage to a for-profit company is the separation of assets and liabilities. Businesses can be set up with one set of assets, so if that company were to lose its source of income, then its income assets would remain untouched. This allows businesses to use its own assets to service its debts, while being protected from lawsuits brought against it by people or companies that could gain a claim against it, through its own assets. For small businesses that may not want to risk their own money to protect themselves, and may therefore choose to keep its assets in place and only allow a limited liability company to function, then this is a great option.
The disadvantage of a business corporation is the risk of losing ownership of the whole business, and therefore all its stocks and shares will be put into escrow, and be put under the control of the board of directors of the company. This means that the shareholders of a for-profit business will all lose their money if the business fails, which in the long run will hurt the overall economy. Another disadvantage of a corporation is that there is a limit to how much money that one person can invest in the company. It is known as the’share holder limit’ in the UK, and this is basically the maximum amount that any person can invest in shares. If you are thinking about starting your own business, or making an investment into your own business, then this may not be a great option for you, as a business corporation is usually seen as more stable.