Longhorn And Gtin example essay topic

Campus Auctions LLC Governance And Operational Structure Corporate Structure Tax implications of this structure The profit of the corporation minus the reserves will pass directly to GTIN and the Longhorn Auctions Partnership that then will pay taxes at their level. This structure is very beneficial for tax and operational purposes. Cost allocation structure 1. Hosting: GTIN will provide free hosting for the site for the first six months.

After that, GTIN will charge Campus Auctions (from this point on referred to as CA) our current market rates for hosting. 2. Development: GTIN will provide the initial development for the site as non-monetary contribution towards the formation of the partnership. This will include the auction software application, development services, design services, and online registration services necessary to get the site up and running.

3. Maintenance: GTIN will offer necessary maintenance for the site to fix bugs (programming or logical errors) for free for the first six months of the partnership. After six months once the company is profitable, GTIN will do any further development on a project-by-project basis with the approval of CA and its representatives. 4. Marketing Materials: Longhorn will provide the initial set of marketing materials to market the site for the first six months.

After the initial 6 months, when CA is profitable, CA will pay for the development of the marketing materials. 5. Sales support: Longhorn will provide sales for CA during the first 6 months. The Longhorn partners will commit to a minimum amount of hours per week they will dedicate to promote the site and add new users.

They will also commit to a minimum amount of auctions each member will set up from the campus bulletin boards on the system per week. After the initial 6 months, the partners will be able to derive a salary from the benefits passed on from CA to Longhorn. In the same token, GTIN will derive its financial reward in the same manner, when the profits from the corporation pass from CA to GTIN. CA Gross Revenues (Hosting Expenses) (Marketing Expenses) (Maintenance) CA Gross Profit (Reserves) CA Net Profit - Distributed to GTIN and Longhorn Detailed Explanation of the cost allocation structure Reserves The reserves will be determined by the management team and will be a % of the profits for maintenance and cash flow needs. A 10% reserve would be reasonable to start with. Once the reserve reaches a certain amount, for example $25,000, the reserve will be discontinued until the funds are used at the level is achieved again.

Net Profit distribution The Net profit will be distributed equally between Longhorn and GTIN. This allows optimal flexibility in allowing you to determine your salaries and what to do with the profits. It will also allow GTIN to invest the profits from CA in other businesses and enterprises. In case more capital is needed to expand the operations, it can be done through the reserves, or by increasing the reserves. It could also be done by issuing more stock and allocating more capital to the enterprise from GTIN and Longhorn.