FromYes to the Dress Limited Liability Company’
Bridalshops play an essential part of a wedding. People who use bridalshops habitually rely on them for more than barely a tuxedo or awedding dress. A good bridal shop generally participates on givingother services as well. For this reason I chose setting up a limitedcompany under the name ‘From Yes to the Dress Limited LiabilityCompany’. Apart from engaging selling bridal dresses the limitedliability company also specializes on bridal decorations and weddingpreparations advice.
Mechanicsof management decisions
Unlikecorporations, Limited liability companies are given permission tooperate without regular management and ownership meetings. For thisreason From Yes to the Dress L.L.C. will be holding formal meetingswhich will then be documented via written minutes whenever a needarises. However, doing will only be voluntary with regard to LLClaws. Meetings will be called only when it becomes necessary tocreate a paper trail for a major LLC decision, for instance approvalof a substantial loan, purchase of a real estate or the expulsion oradmission of a member. Nonetheless, since the company will only havetwo members i.e. my wife and I, decision on expulsion of one memberwill make no sense. Management by objectives will be the mechanic ofdecision making. This technique is applied mainly to personnelmanagement. Fundamentally it needs deliberate objective formulationfor periods, for instance, the subsequent calendar of business year.Goals are laid down and the monitored(Jennifer, 2014).
LLCowners are required by the state to file articles of incorporation.In this document it is contained the information for the enterpriseas well as the enterprise name plus the names of the all owners. Ifyou consider the forms issued by every state to be filled by theowners of a LLC, then you notice the form state that two or moreholders are needed. For this reason, my initial plan of being thesole owner of the company was not viable. To simplify the issue Idecided to have my wife as the second owner of From Yes to the DressLLC and as long as she remains dormant and never profit from theenterprise she will not have any liability neither will she berequired to file any taxes connected to the company’s income (Ali,2013).
Prosof Management by Objectives:-
Theadvantages of this technique can be summed up by stating that resultis significantly improved management. In other words no objectivescan be established without a plan. Management by objectives incitesmanagers to consider planning for results rather than just planningfor work or activities. Secondly, this technique forces managers toilluminate organizational structures and roles. It also encouragespeople to become committed to their goals. People no longer work byjust following instructions and waiting for decisions and guidancerather than they become individuals with well-defined goals. Thistechnique also helps in developing efficient controls (Brett,2014).
Anotheradvantage is that objectives require monitoring and quantifying. Alsothe necessity to clarify goals is stressed and improvementsuggestions are gained from all management levels. The eighthadvantage is that all managers have a comprehensible idea of themajor areas of their duties and the standards needed. Staffperformance can be ignored and their requirements for improvementshighlighted. Lastly, greater participation may improve communicationand morale.
Consof Management by Objectives:-
Thefirst disadvantage of management by objective is that it takes someyears to be effective. Secondly, there is too much paperwork andcomplexity in measuring key operations. It is also a disadvantage toconsider that achieving objectives may be outdone by organizationalgoals. For instance, cost reduction programs gained by suspendingmaintenance. Surrendering everything to hit targets may cause poormanagerial judgment. Another disadvantage is that since mostcompanies tend to raise their objectives too high, staff may becomefrustrated. Fifth advantage most of the times appraisals are made onpersonality traits instead on performance. Most companies havemaneuvered their salary administrations to evaluation by results.Setting measurable objectives for staffs who are there to aid the‘line’ realize its ends becomes difficult. It can also beineffective to council and review managers. Lastly, not all employeesappreciate being held responsible hence goals obliged upon the maycause ill-feeling.
FromYes to the Dress anticipate profitability by the beginning of itsthird year of functionality. In order to get the company up andrunning, I will need to secure financing. The original market shareis anticipated because of the exclusive position that the company istargeting. Market share is estimated to grow at a more reserved rateafter the fifth year.
Thefollowing suppositions are vital to understanding projections of theprofit and loss.
Thecompany does not do business on credit- the customer has to pay fullamount to get the company’s goods and services.
Anestimation of 80% of all sales will be carried out using creditcards. These cards will be calculated as 80% of the purchases times1.8%.
Therewill be a three month delay on the sales for the clothing items. Thisis because majority of clothing items will be ordered via custom andconsequently, the company will have to disburse for them up to thetime they will arrive i.e. approximately two months from the orderingdate.
Projected Profit and LossFromYes to the Dress anticipate losses in the first year. This is due totime taken to build momentum and create traffic. Nonetheless, afterpurchases have escalated, the outcomes will be positive since most ofthe other disbursements will remain fixed. As a matter of fact, thecompany expects that sample catalog expenses will essentiallydeteriorate in the coming years. A number of designers will offersample inventory at considerable discounts and provide the samples atno costs after good credit terms are set. Consequently, the yearlyexpenditures for try inventory should go down.Projected Cash Flow Thecash flow of From Yes to the Dress will be somewhat unique. For thosecommodities that will be sold off the floor, revenue recognition andthe cash flow will be traditional, full payment will be receivedduring the sale, and the client will own the commodity at that time. This demonstrates how a majority of shoe sale will be carried out,plus a few other accessory purchases. Onthe other hand, a few other items in the inventory will show adifferent flow. For instance in the case of a dress the client willtry on a dress in the store, and when he decides to buy thecommodity, he will probably order it in the color and size of hisselection. To initiate the process, the client will provide a 50%deposit (although some customers will be willing to pay the fullamount during the placing of the order, the company assumes that allcustomers will go for the 50% option. The outstanding balance will bepayable within 30days of when the commodity arrives in the store.This issue of timing has also been considered for the value of theitems sold. It will be only when the goods are shipped that the storewill be charged for the commodities. As a result, cash leakage forthe item’s cost will narrowly match the cash influx of the consumerpaying the item’s balance.
TheIRS handles co-owned LLCs as corporations for the purposes oftaxation. Since from yes to the dress is a co-owned LLC, it will notbe paying taxes on business income, in its place, my wife and I willeach pay taxes on our profits’ lawful share on our personal incometax returns( with an attachment of Schedule E) (Nellie,2011).The profits and losses share of both my wife and I, known asdistributive share, will be spelt out in the LLC operating agreement.
Nonetheless,members’ distributive shares will be divided up the IRS willhandle each member as if they receive their distributive shares eachyear. This implies that my wife and I ought to pay taxes on theirdistributive shares regardless of whether the company actuallydistributes the share to us or not. The realistic significance ofrule is that though the limited liability members would requireploughing back their profits to the company, each owner is liable forincome taxation on their rightful potion of that money.
Reuting,Jennifer.(2014).WhichState Should I Form My LLC or Corporation In. retrievedfrom: http://www.myllc.com/which-state-to-form-llc.aspx
Akalp,Nellie.(2011).Willan LLC Help Lower Your Business Taxes?Retrievedfrom:http://smallbiztrends.com/2011/11/will-llc-lower-business-taxes.html
Boone,Ali.(2013).ShouldYou Put Your Rental Properties in an LLC?Retrievedfrom:http://www.biggerpockets.com/renewsblog/2013/08/17/rental-properties-llc/
Melson,Brett.(2014).prosand cons Delaware series LLC. Retrievedfrom:http://blog.delawareinc.com/pros-and-cons-of-the-delaware-series-llc/