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Thursday, December 29, 2011

The different types of company



Private limited company

All companies that are not public companies are defined by law as private. Being a private company is the default position. Private companies can range from a small family company to a subsidiary in a large group that is a substantial trading entity in its own right. Sometimes, they will simply be trading vehicles for one or two individuals who want the benefit of limited liability or the added kudos of trading as a company.
As such, the private company is a very flexible format that can be adapted to fit numerous different requirements. But the one thing that a private company cannot do as a matter of law is offer its shares to the public. Any private company that wants to issue shares to the public must first become a plc or public limited company.
Private companies will, therefore, usually have fewer shareholders than a public company, and there will often be restrictions on the transfer of their shares. Those with a very small number of shareholders, including those that are subsidiaries, might ban all transfers of shares that are not first approved by the board of directors. This allows the board to control who becomes a shareholder and, ultimately, who controls the company.
Companies with a larger shareholder base might have more sophisticated rules that allow the transfer of shares by a shareholder but first require that they are offered to existing shareholders (under ‘preemption provisions’), thereby giving them the opportunity to keep ownership within the existing group and to exclude new shareholders.

Public limited company

If you want to be a public rather than a private company, you must take a number of steps. You will need:
  • A name that ends with the words ‘public limited company’ (or the Welsh equivalent); permitted abbreviations are PLC, plc or Plc.
  • An issued share capital with a nominal value of at least £50,000 and paid up share capital of at least £12,500 (or the equivalent in euros). You could, for example, issue 50,000 £1 shares, or 250,000 20p shares, each paid up at least to one quarter of its nominal value – 50,000 £1shares paid up as to 25p on each share, or 250,000 20p shares paid up
    as to 5p on each. (There is no equivalent minimum for a private company.)
A public company is subject to more stringent controls than a private one in a number of areas. Some of them are listed below.
  • The rules on making loans to directors are more restrictive for all companies in a group where one of the members is a public company.
  • A public company can purchase or redeem its own shares, but it can only pay for them by using those profits from which dividends can be paid. A private company, on the other hand, has the option of using its capital if distributable profits fall short.
  • It is a criminal offence for a public company to give financial assistance for the purchase of its own shares, for example by lending money to someone buying a stake in the company. Since October 2008, there has been no equivalent ban for private companies.
  • Many private companies are allowed to prepare abbreviated accounts each year. Public companies, on the other hand, have to prepare and file with Companies House a full set of accounts, and pay the added costs that may involve.
  • A public company must have a company secretary and hold an AGM each year; a private company can dispense with both.

Tuesday, December 20, 2011

what is company???


A company is a form of business organization. It is an association or collection of individual real persons and/or other companies, who each
provide some form of capital. This group has a common purpose or focus and an aim of gaining profits. This collection, group or association of persons can be made to exist in law and then a company is itself considered a "legal person". The name company arose because, at least originally, it represented or was owned by more than one real or legal person. In the United States, a company is a corporation— or, less commonly, an association, partnership, or union—to carry out an enterprise.Generally, a company may be a "corporation, partnership, association, joint-stock company, trust, fund, or organized group of persons, whether incorporated or not, and (in an official capacity) any receiver,
trustee in bankruptcy, or similar official, or liquidating agent, for any of the foregoing."In English law and in the Commonwealth realms a company is a body corporate or corporation company registered under the Companies Acts or similar legislation.It does not include a partnership or any other unincorporated group of persons, although such an entity may be loosely described as a company.

Thursday, December 8, 2011

Role of finance in Business......!


The goal of any finance function is to achieve three benefits: business support service, lowest costs and effective control of the environment. Money is the lifeblood of a business and finance is the nerve center. Finance is required to promote or create a business, gain assets, develop products, run market surveys, advertise. The conventional view of finances focuses on being reactive, efficient, quantitative and risk averse. New innovative views focus on being vision-oriented, opportunity and growth focused, intuitive and risk-taking.
Budget And Forecasting

Budgeting and forecasting relate your business to the outside community. Driven by earnings and growth estimates, stock prices rely on timely data forecasting to achieve optimal price and market capitalization. Small businesses benefit from this knowledge even though not publicly traded. Knowledge of raw material requirements, personnel and staffing demands, and expansion requirements force entrepreneurs to thoughtfully consider their needs.
Bookkeeping

Also referred to as the close, Finance, Money Business and Stock Market website defines bookkeeping as the “process by which all subsidiary ledges and journals of the organization are summed up for a given time.” A close can be small and simple or incredibly long and complicated depending on the size and complexity of the company. Your company should be able to close within a few hours, so the process can happen daily.
Reporting

Any company with shareholders or outside financing should have standard external reporting requirements. External reports focus on how banks, shareholders and the general public all relate to the organization. Stockholders rely on reports of data forecasting and budgeting when determining when to buy and sell, so accurate data defines the entire process.
Payables And Receivables

The finance department manages all cash flow into and out of a business. Vendors and creditors need payment correctly and on time to keep things running smoothly. You need to stay liquid--the right amount of cash on hand--at all times and finance must maintain payment plans that keep everything on track.
Importance

Due to public trading, large company owners tend to be widely scattered with management sometimes located in another place entirely. The management must ensure the owners’ economic welfare to stay employed. A company’s success and growth occurs when the principles and procedures of corporate finance are followed. Corporate finance forms the backbone of a corporation. Without accurate and timely information, the system would fall to pieces.

Sunday, October 23, 2011

Different Types of Business Organizations...!!!


One of the most important decisions any business owner will face when starting a new business is deciding on what structure the business will take. Some of the factors which will assist you in making that decision include.
Your needs for capital.
The number of people you project employing.
How you plan to distribute earnings.
Any liabilities you are assuming.
How long you are planning to operate your business.
Any legal restrictions.
What type of business operation you start.
The tax implications.

Listed below are some of the advantages and disadvantages associated with types of business organizations including sole proprietorship, partnership and corporation.

Sole Proprietorship

A sole proprietorship is the least expensive and easiest way to start your business. What is simpler than finding a location for your business and opening the doors? All right, I might have oversimplified it there, but it really is pretty easy. You will have to register a business name and obtain other local licenses which will depend on your local government. There will also be fees associated with obtaining them. Hiring an attorney would be a smart move and the attorney fees will be less than other forms of business as there is a smaller amount of documents to be filed because the owner of the business has the final word in all business decisions.

Partnership

The thing with partnerships is that there are several different types. The two most common types of partnerships are limited partnerships and general partnerships. Two or more people can form a general partnership through a simple oral agreement. Starting a partnership with an oral agreement is not recommended, you should get legal documents drawn up by an attorney. You can expect the fees for this to be higher than a sole proprietorship, but they should be less than what you would expect for incorporating. A large benefit for having a legal partnership drawn up is it will aid you in resolving any future business disputes. A down side to a partnership is that a partner can be held responsible for the actions of other partners in the business in addition to their own actions.

Some of the things included in a partnership agreement:
The compensation for partners.
How long will the partnership last.
How will the profits or losses be divided?
What type of business is it?
What is each partner investing into the business?
If the partnership dissolves how will assets be distributed?
A settlement clause for disputes.
Provisions for dissolution of the partnership.
Provisions for future changes to the partnership.
Define any restrictions to expenditures or authority.
Provisions for death or incapacity.

Corporation

Incorporating your business does not require that you have an attorney, however it is highly recommended. The structure of a corporation is complex. It is more expensive to organize it than the other two business entities. Corporate control lies with the person who has ownership of the most shares of stock. If a single stockholder or a group of stockholders own at least 51% of the stock they can make decisions of policy. Corporations will have annual meetings of stockholders and regularly scheduled meetings for the board of directors with records kept to document their decisions. The size of the corporation will affect how formally or informally it can operate. Smaller corporations might operate less formally, but still need to keep proper documentation. Stockholders can hold officers of corporations liable for any actions which might have been improper. In those kinds of cases stock ownership is generally where the liability is limited to unless there was a fraud committed. An attorney can help you decide to incorporate as either a C or S type corporation.

WHAT IS BUSINESS


A business is a legal entity that is set-up or designed to make goods, sell goods, or provide a service. Many businesses are for-profit organizations as opposed to a non-profit organization or hobby job. How an organization is structured affects how a business is run, how it is taxed, and how profits are distributed. The actual business structure can also affect the personal liability of any owners of the business.
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