There are many business structures available to new business owners, from operating as a partnership to forming a corporation. This is the result of the flow of communication an organizational structure offers, as well as the establishment of responsibility and respect for the company hierarchy that comes from strong structure.
An efficient company structure can benefit the organization in several ways, including making it easier to delegate responsibility and effect change throughout the organization.
When a defined hierarchy is in place, the company is better equipped to make important decisions and adjust practices to meet the demands of competition. A well-structured organization provides a sound basis for effective planning: Furthermore since each job is well described in terms of qualifications and duties, the promotional stages can Advantages of the corporate structure more clearly established.
A good organizational structure facilitates attainment of objectives through proper coordination of all activities: Partnership A partnership of two or more individuals has the ability to collaborate.
However, in a well organized company where the responsibilities are clearly established, this does not occur. Later, when the company distributes dividends to its shareholders, the shareholders must pay taxes on dividends received from the business at their personal income tax rates.
There are no other owners to divide profits with, which allows a sole proprietor to use company funds in any manner. When multiple departments are involved in a single endeavor, a unified marketing message can be essential to project success.
When organizational structure regulates the flow of information, then changes within that information are easier to monitor and better adaptable for a company-wide training program. Corporation Corporations provide shareholders, directors and officers limited liability protection for company obligations.
The runarounds occur when we do not know who is responsible for what and we are not sent to the right people in the first instance for getting some work done. It eliminates overlapping and duplication of work: Focus on Strategy Using a strong organizational structure allows a company to better focus on a single set of goals instead of each group working towards its own agenda, according to Family Business Experts.
In a good organizational structure, the conflicts between individuals over jurisdiction are kept to a minimum: Communication is easier at all levels of organizational hierarchy: Also, partners are not required to file income taxes as a business entity, meaning each partner reports his share of business profits and losses on his personal income tax return.
Since the goals are clearly established and resources clearly identified, both short term as well as strategic planning becomes more focused and realistic and such planning contains the provision to permit changes to be made in the right direction including expansion and contraction of facilities, operations and activities when it becomes necessary.
A partner may be even liable for the negligent acts of another partner. However, a LLC is costly to form and may not be able to raise capital because it cannot issue stock like a corporation.The corporate form of organization presents some advantages for Tom and Tim.
The biggest advantage for Tom and Tim is the limited liability that a corporation provides for its shareholders. Compared to other business entities, corporations offer many advantages, such as liability protection and ease of transferring ownership shares.
Though corporations are very common, a corporation may not be the best structure for every situation, and it does have some disadvantages.
Advantages of the Corporate Structure A company is a legal entity created separately from those who own and operate it. As a separate entity, the company's debts and taxes are separate from its owners (shareholders), thereby, offering the greatest personal liability protection of all business structures.
3 Advantages and Disadvantages of the Corporate Form of Business 4 Advantages & Disadvantages of the Structure of an Organization One of the first steps to take when starting a business involves. 10 Benefits of a Good Organizational Structure – Explained!
Article shared by: Since a good organizational structure requires that the duties be clearly defined and assigned, such duplication of work is eliminated. 4. It decreases likelihood of “runarounds:”.
Starting a Business The Basics of Business Structure to more complex business forms as the business develops.
Advantages of the Sole Proprietorship and today's corporate law still carries.Download