Organizational Plan

ORGANIZATIONALPLAN

DISCUSSIONONB a s e d o n t h e P e r s p e c t I v e o f B a n g l a d e s h

S.M. Al-Amin

BBA 027 07837

Arifur Rahman

BBA 027 08076

Rizwana Chowdhury

BBA 027 08094

Israt Ara Khan

BBA 027 07393

An Organizational Plan is basically a “to do” list for an organization.

It lists out the plan of work, programs, and organizational growth over a period of time - six months, a year or five.

The tasks involved, who is responsible for them, and when they’ll be done.

• Set priorities for work• Make sure tasks get done on time• Focus on one thing at a time• Share work among staff, board members & volunteers• Make goals clear to investors• Get a handle on big projects by breaking them down• See the big picture of what organization is doing

An Organizational Plan Helps To:

•Management’s ability and commitment to the new venture are significant to investors.

•Investors demand that the management team not operate the business as part time venture.

developing the

management team

•management team to operate the business full time at a modest salary

•Drawing out large salaries for the management team is unacceptable to an Entrepreneur and considered to be a lack of psychological commitment to the business

basic legalforms

are

Proprietorship form of business with single owner; unlimited liability; control over all decisions; receives all profits

Legal forms of

Business

Partnership form of business with 2 or more individual with unlimited liability, pooling resources to own a business.Corporation form of business with separate legal entity, run by stockholders having limited liability & regulated by statute

FactorsProprietorshi

pPartnership Corporation

Ownership

IndividualNo Limitation on

Number of partners

No Limitation on number of

stockholders

Liability of Owners

Individual Liable for business Liability

In general partnership,

individuals are liable for business

liabilities. In Limited

Partnership partners are

liable for capital contribution

Amount of capital

contribution is limit of

shareholder’s liability

Factors of the three forms of

Business Formation



Costs of Starting Business

Only Filing Fees for

trade name

Partnership agreement,

legal cost, and minor filing fees for trade name.

Limited partnership

requires more comprehensive

agreement, hence higher

cost

Created only by statute, Articles

of incorporation,

filing fees, taxes, and fees

for states in which

corporation is registers to do

business



Continuity of

Business

Death dissolves the

business

Death or withdrawal of one partner terminates partnership

unless partnership agreement stipulates

otherwise. In limited

partnership death or

withdrawal of one partner has

no effect on continuity.

Limited partners can withdraw

capital six months after

notice is provided

Greatest form of continuity. Death or

withdrawal of owner(s) will

not affect legal existence of

business



Transfer-ability of interest

Complete freedom to

sell or transfer any

part of business

General Partner can transfer

his/her interest only with

consent of all other general

partners. Limited partner can sell interest without consent

of general partners.

Stockholders can sell or buy stock at will.

Stocks’ transfer may be

restricted by agreement. In S

corporation, stock may be

transferred only to an individual

Capital Requirem

ents

Capital raised only by loan or increased

contribution by

proprietor.

Loans or new contributions by partners require

a change in partnership agreement

New Capital raised by sale of stock or bonds or by borrowing in name of Corp. In S Corp. only

one class of stock & limited

to 75 shareholders



Management

Control

Proprietor makes all

decision and can act

immediately

All partners have equal control and

majority rules. In limited

partnership, only the general partners control

the business.

Majority stockholder(s)

have most control from legal point of view. Day-to-day control in

hands of management

who may not be major

stockholders.

Distribution of

profits and losses

Proprietor responsible and receives

all profits and losses

Depends on partnership

agreement and investment by

partners.

Shareholders can share in

profits by receipt of dividends

Attractive-ness for raising capital

Depends on capability of proprietor

and success of business

Depends on capability of partners and

success of business

With limited liability for

owners, more attractive as an

investment opportunity

Tax Attributes of Forms of Business

Attributes Proprietorship Partnership Corporation

Taxable yearUsually a

calendar year

Usually calendar year but other day may be used

Any year can be used at

beginning. Any changes in

incorporation

Distribution of profits to owners

All income appears on

owner’s return

Partnership agreement may have

special allocation of

income. Pardoners pay

tax on their pro rata

shares income on individual return even if

income not immediately distributed

No income is allocated to stockholders


Organization costs

Not amortizable Amortizable

over 60 monthsAmortizable

over 60 months

Dividend received

$100 dividend exclusion for single return and $200 on joint return

Dividend exclusion of partnership passes to partner

80% of more of dividend

received may be deducted

(after 12/31/86)

Capital gain

Taxed at individual level. A deduction is

allowed for long term

capital gains

Capital gain to partner will be

taxed as a capital gain to the partner

Taxed at corporation

level. After July 1, 1987 the

maximum rate will be 34%.

Capital lossesCarried forward

indefinitely

Capital losses can be used to

offset other income.

Carried forward indefinitely

Carry back three years and carry over five years as shore,

term capital loss offsetting

only capital gains.


Initial organization

Commencement of business results in no

additional tax for individuals

Contribution of property to a

partnership not taxed

Acquisition of stock for cash

entails no immediate

taxes. Transfer if stock value greater than contributed

property

Limitations on losses deductible

for real estate activities

Amount of risk may be

deducted except for real

estate activities

Partnership investment

plus share of resources

liability if any. At risk rules may apply

except for real estate

partnership

No losses allowed except on sale of stock or liquidation

of corporation.


Medical Benefit

Itemized deduction for

medical expense in excess of

adjusted gross income on

individual’s return. No

deduction for insurance premium

Cost of partner’s

benefit is not deductible to

business as an expense. Possible

deduction at partner level

Cost of employee

shareholder coverage

deductible as business

expense if designed for benefits of employee.


Retirement benefits

Limitation and restrictions

basically same as regular

corporation

Same as for corporations

Limitations on benefits on

benefits from defined plans-

lesser of $ 90,000 or 100% of corporation. Limitation on

contribution to defined

contribution plans-lesser of

$ 30,000 or 25% of

compensation ( 15% of

aggregate for profit-sharing

plans)

The team must be able to accomplish

three functions:

•Execute the business plan

•Identify fundamental changes in the business as they occur

•Make adjustments to the plan based on changes in the environment and market that will maintain profitability

building the

management team

Once legal form of organization is determined, the entrepreneur will need

to prepare a job description and job analysis.

building a successful

organizational culture

The job analysis will be serving as a guide in determining hiring procedures, training, performance appraisal, compensation program, and job description and specification.

Job description Specify the details of the work that is to be performed and any special conditions or skill involved in performing the job. Job description should contain a job summary, skills or experience required, a summary of the responsibilities and duties the authority of the individual and standards of performance.

building a successful

organizational culture Job specification

outlines the skills and abilities needed to perform the job including prior experience. Outlining the job specification for a trained employee is easier than for the untrained people who will be trained on the job. So the entrepreneur should focus on specific qualities that will be required, such as personality, physical traits, interest, or sensory skill.

•Reviewing operating and capital budgets

•Developing long-term strategic plans for growth and expansion

role of the Board of Directors

•Supporting day to day activities

•Resolving conflicts among owners or shareholders

•Ensuring the proper use of assets or

•Developing a network of information sources for the entrepreneurs

The member of

board members should be carefully selected considering the following

criteria

selecting Board members

• Select individuals who can work with a diverse group and will commit to the venture mission

• Select candidates who understand the market environment or can contribute important skills to the new venture’s achievement of planning goals

• Select candidates who will show good judgment in business decision making

Board of

Advisors• Loosely tied to the organizations

• Serve the venture in an advisory capacity

• Has no legal status

• Meet less frequently; depending on the important venture decision

• Useful in a family business

• Selection process similar to the BOD

• Compensated per meeting basis or with stock

• Provide reality check

Uses of Board of Advisors

• Formal part of a venture

• Outside advisors, such as lawyers, accountants, ad agencies, etc.

thank

you

Organizational Plan

Business

business partnership

limited partnership

general partnership

partnership agreement

corporationform of business

business liabilities

limited partnership

business transferability