Crowdfunding and Business Ownership Options Report

Exclusively available on Available only on IvyPanda® Made by Human No AI

Businesses that resort to crowdfunding or seek investments may usually be small sole proprietors or partnerships because these types of organizations regularly work with a limited amount of capital. If such companies want to expand and their own profit does not cover the costs of hiring new workers, buying new equipment, or renting an office, they may opt for crowdfunding or third-party financing.

However, accepting investment money makes one under sole proprietorship personally liable for all debts which is a risk, but also allows paying no additional taxes as such form of business is taxed as personal income. Partnerships may be more reliable in terms of splitting the costs and liabilities, yet they face more decision-making issues (Nickels et al. 71). For instance, partners may disagree on how to allocate the received funds from Kickstarter.

Reception of a large sum of money for some purpose usually requires a business, regardless of its size, to plan and manage its allocation. Management would probably involve the organization of the transfer process, cost planning, and spending control. While in corporations there is usually a separate department or several professionals resolving these issues, sole proprietors may not always enjoy this privilege. Nevertheless, the importance of leadership should not be underestimated even in cases, when your staff is not numerous. Enabling every employee to commit meaningfully to the project is crucial for any company.

In case of successfully receiving funds, the equity of the company is likely to increase as the money will, with a high degree of certainty, be transferred into assets. Nonetheless, debts may still arise, and equity may decrease in such a case (Gallo). Capitalization is a process of fueling the company with funds is the desired outcome for the business. However, owners need to keep in mind that debts are also included in capitalization and manage the company in a way to decrease their debts and increase equity.

Works Cited

Gallo, Amy. “A Refresher on Debt-to-Equity Ratio.” Harvard Business Review, 2015. Web.

Nickels, William, et al. Understanding Business: The Core. 1st ed., McGraw Hill, 2016.

More related papers Related Essay Examples
Cite This paper
You're welcome to use this sample in your assignment. Be sure to cite it correctly

Reference

IvyPanda. (2021, May 12). Crowdfunding and Business Ownership Options. https://ivypanda.com/essays/crowdfunding-and-business-ownership-options/

Work Cited

"Crowdfunding and Business Ownership Options." IvyPanda, 12 May 2021, ivypanda.com/essays/crowdfunding-and-business-ownership-options/.

References

IvyPanda. (2021) 'Crowdfunding and Business Ownership Options'. 12 May.

References

IvyPanda. 2021. "Crowdfunding and Business Ownership Options." May 12, 2021. https://ivypanda.com/essays/crowdfunding-and-business-ownership-options/.

1. IvyPanda. "Crowdfunding and Business Ownership Options." May 12, 2021. https://ivypanda.com/essays/crowdfunding-and-business-ownership-options/.


Bibliography


IvyPanda. "Crowdfunding and Business Ownership Options." May 12, 2021. https://ivypanda.com/essays/crowdfunding-and-business-ownership-options/.

If, for any reason, you believe that this content should not be published on our website, please request its removal.
Updated:
This academic paper example has been carefully picked, checked and refined by our editorial team.
No AI was involved: only quilified experts contributed.
You are free to use it for the following purposes:
  • To find inspiration for your paper and overcome writer’s block
  • As a source of information (ensure proper referencing)
  • As a template for you assignment
1 / 1