Business can be done in a variety of different ways. An organization can be made through private ownership, through shared ownership or through a corporation. There are a lot of pros and cons associated with the ideation of a corporation.
Given below are some of the listed pros and cons of organizing a business as a corporation. While the idea of corporation changes with the type of industry in which the company is operating, there are certain aspects which remain true for all.
Pros:
1. It is easier to take debts and raise funds. The amount of risk shared by the individuals sharply decreases as everything is taken on the corporation and not an individual.
2. The income taxes paid by corporation are generally lower as compared to the taxes paid individually by owners.
Cons:
1. A large amount of time and effort is required to make an organization as a corporation. Therefore, due studies need to be carried out before such a move.
2. Lots of paperwork is required to take the organization to the next level.
3. Some forms of corporate taxes may come into picture if a new corporation is being formed.
Therefore there are both pros and cons of forming a corporation. A decision should only be made after due planning and weighing of the two options.
Main types of decisions which a financial manager makes
A financial manager is a person who is required to provide important financial insights to a company, or to a group of individuals. The nature of this information relates to the financial performance of the organization which can be measured through different metrics.
In order to remain profitable, the companies rely a lot on the skills and working of the financial managers. Some of the major roles performed by the financial managers include:
1. Reviewing of financial reports
2. Monitoring of accounts and preparing of activity reports
3. Preparation of financial forecasts
4. Methods of improving profitability
5. Analysis of growth opportunities through expansions, mergers and acquisitions
With an increase in the power of automation and new technologies, the financial managers see their role shifting from the development of the financial performance charts to a role which relates to data analysis and implication analysis.
Therefore, the role and duties of a financial manager has grown to include the analysis of cash flows, law compliance activities and analysis of mergers and acquisitions. Generally an individual who has a good knowledge of accounting and basic finance, can easily manage as a financial manager. There is a lot of salary and employment opportunity for such individuals.
Shareholders control of a corporation
Shareholders have an immense control on the organization as a whole. They basically own the whole organization and can therefore control major decision making of the organization. As a group of people, they possess the strength to drive decision making and take huge calls related to the future of an organization.
Most rights of the shareholders are protected by the government and the constitution. However, mostly the shareholders do not use their powers in the day to day activities of the firm. They may occasionally use it during a shareholders meeting or during a major voting process.
Some of the major powers possessed by the shareholders which helps them control the corporations include:
1. They have the power to propose actions to the organization. They can make a case in point about the way in which the company may run.
2. Shareholders can demand a lot of disclosures from the managers and therefore can look at the daily working of the company
3. They have the power to vote in major company meetings.
4. Shareholders can vote in the director elections and therefore choose the board of directors, who in turn have to keep the shareholder interest at the biggest level.
Importance of a stock market to a financial manager
Stock market provides a grand stage through which financial managers can invest and plan the investment of a firm. The stock market includes all the firms which are listed on the stock exchange, firms in which companies can come and invest sums of money. Such investments are diverse, thereby reducing risk of loss, and they also provide good returns.
Since the stock market investments form a major part of the financial reports of a company, proper understanding of the same is required from the purview of the financial manager. Following are the major reasons why stock markets are important for a financial manager:
1. Most activities which financial managers suggest would involve stock markets. The actions suggested by the financial managers would be related to the investment and divestment from the stock market.
2. Financial forecasts and profitability are determined by the stock market performance.
3. Mergers and Acquisitions can only occur if the stocks are particularly well determined.
Hence, the importance of stock markets for the financial managers cannot be underestimated. The financial managers have to look at the various activities occurring in the stock markets in order to come at a good financial plan and in order to increase the profitability of the firm.’
References:
Business Formation. (n.d.). Retrieved May 31, 2017, from https://www.justia.com/business-formation/docs/corporation-advantages-disadvantages.html
(n.d.). Retrieved May 31, 2017, from https://www.newenglandcollegeonline.com/resources/accounting/financial-manager-career-outlook-and-salary/
Careers Advice. Retrieved 24 Dec, 2017, from http://www.cvtemplatemaster.com/careers-advice/
What Extent Do Shareholders Control the Activities of a Corporation? (n.d.). Retrieved May 31, 2017, from http://smallbusiness.chron.com/extent-shareholders-control-activities-corporation-66661.html
Given below are some of the listed pros and cons of organizing a business as a corporation. While the idea of corporation changes with the type of industry in which the company is operating, there are certain aspects which remain true for all.
Pros:
1. It is easier to take debts and raise funds. The amount of risk shared by the individuals sharply decreases as everything is taken on the corporation and not an individual.
2. The income taxes paid by corporation are generally lower as compared to the taxes paid individually by owners.
Cons:
1. A large amount of time and effort is required to make an organization as a corporation. Therefore, due studies need to be carried out before such a move.
2. Lots of paperwork is required to take the organization to the next level.
3. Some forms of corporate taxes may come into picture if a new corporation is being formed.
Therefore there are both pros and cons of forming a corporation. A decision should only be made after due planning and weighing of the two options.
Main types of decisions which a financial manager makes
A financial manager is a person who is required to provide important financial insights to a company, or to a group of individuals. The nature of this information relates to the financial performance of the organization which can be measured through different metrics.
In order to remain profitable, the companies rely a lot on the skills and working of the financial managers. Some of the major roles performed by the financial managers include:
1. Reviewing of financial reports
2. Monitoring of accounts and preparing of activity reports
3. Preparation of financial forecasts
4. Methods of improving profitability
5. Analysis of growth opportunities through expansions, mergers and acquisitions
With an increase in the power of automation and new technologies, the financial managers see their role shifting from the development of the financial performance charts to a role which relates to data analysis and implication analysis.
Therefore, the role and duties of a financial manager has grown to include the analysis of cash flows, law compliance activities and analysis of mergers and acquisitions. Generally an individual who has a good knowledge of accounting and basic finance, can easily manage as a financial manager. There is a lot of salary and employment opportunity for such individuals.
Shareholders control of a corporation
Shareholders have an immense control on the organization as a whole. They basically own the whole organization and can therefore control major decision making of the organization. As a group of people, they possess the strength to drive decision making and take huge calls related to the future of an organization.
Most rights of the shareholders are protected by the government and the constitution. However, mostly the shareholders do not use their powers in the day to day activities of the firm. They may occasionally use it during a shareholders meeting or during a major voting process.
Some of the major powers possessed by the shareholders which helps them control the corporations include:
1. They have the power to propose actions to the organization. They can make a case in point about the way in which the company may run.
2. Shareholders can demand a lot of disclosures from the managers and therefore can look at the daily working of the company
3. They have the power to vote in major company meetings.
4. Shareholders can vote in the director elections and therefore choose the board of directors, who in turn have to keep the shareholder interest at the biggest level.
Importance of a stock market to a financial manager
Stock market provides a grand stage through which financial managers can invest and plan the investment of a firm. The stock market includes all the firms which are listed on the stock exchange, firms in which companies can come and invest sums of money. Such investments are diverse, thereby reducing risk of loss, and they also provide good returns.
Since the stock market investments form a major part of the financial reports of a company, proper understanding of the same is required from the purview of the financial manager. Following are the major reasons why stock markets are important for a financial manager:
1. Most activities which financial managers suggest would involve stock markets. The actions suggested by the financial managers would be related to the investment and divestment from the stock market.
2. Financial forecasts and profitability are determined by the stock market performance.
3. Mergers and Acquisitions can only occur if the stocks are particularly well determined.
Hence, the importance of stock markets for the financial managers cannot be underestimated. The financial managers have to look at the various activities occurring in the stock markets in order to come at a good financial plan and in order to increase the profitability of the firm.’
References:
Business Formation. (n.d.). Retrieved May 31, 2017, from https://www.justia.com/business-formation/docs/corporation-advantages-disadvantages.html
(n.d.). Retrieved May 31, 2017, from https://www.newenglandcollegeonline.com/resources/accounting/financial-manager-career-outlook-and-salary/
Careers Advice. Retrieved 24 Dec, 2017, from http://www.cvtemplatemaster.com/careers-advice/
What Extent Do Shareholders Control the Activities of a Corporation? (n.d.). Retrieved May 31, 2017, from http://smallbusiness.chron.com/extent-shareholders-control-activities-corporation-66661.html