Question

In: Finance

1. To maintain the growth momentum, FFY needs to change its structure from Sole Proprietorship. The...

1. To maintain the growth momentum, FFY needs to change its structure from Sole Proprietorship. The question is to decide between converting FFY to either a Partnership or a private corporation. Vijay would like to know the features of both these forms and like you to recommend one that is a good fit for the business. Answer in about 250 words.

Solutions

Expert Solution

If Vijay wants to change the form of sole proprietorship business into a different form of Business and he wants to either enter into a partnership or a private corporation in order to expand its business, the following factors to be kept into mind-

Factors regarding partnership-

A.partnership will always be having more than one partner and the control of the form will be shared between them

B.partnership do not have a separate legal existence and a perpetual succession

C. The liabilities of the partners are unlimited in nature and they are also liable from their personal stake.

D. Partnership can be formed on the basis of limited liability by entering into a limited liability partnership.

Features of of private corporation are as follows-

A. This corporation will be having access to the financial market better than the partnership firm

B. The ownership and management have to be segregated in case of these companies

C. The liabilities of owners of the private companies are limited in nature

D. The company will be having a perpetual succession different from its members.

so Vijay should be choosing accordingly depending upon his needs and his risk appetite along with his risk-sharing control and he will also be taking into factor the growth opportunities for company


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