Exxon Mobil Corporation is an American multinational oil and gasoline company headquartered in Texas. The company has multiple options for the formation of a separate entity. Specializing in a small industry is one of the available options for Exxon. A specialized industry option is available for a limited liability corporation, and it has many advantages that may persuade potential investors. First, companies that operate in a small specialized industry have tax relief (DeBoskey et al., 2018). Thus if Exxon operates in a specialized industry, it can apply for tax relief. However, Exxon may face the threat of overspecialization because its employees may have no room for growth.
Secondly, Exxon can operate as a limited liability company. A limited liability entity is a hybrid of a corporation and partnership. The company can be a good option for Exxon because it has few or no corporate formalities, unlike other corporations required to meet certain legal conditions. An LLC has no ownership restriction; thus, it can increase shareholders to collect more capital (DeBoskey et al., 2018). However, this form of business has fewer or no fringe benefits. Also, LLC profits must be subjected to social security and Medicare taxes, which reduce the amount of profit an entity reports.
Delegate your assignment to our experts and they will do the rest.
A general partnership is another option that Exxon can consider to form a separate company. A general partnership is a form of business whereby two or more investors agree to share assets, profits, and liability (Lupulescu, 2017). The firm is easy to form and promotes flexibility for reorganization if the company is not operating efficiently. Conversely, the business is easy to dissolve if the company fails to honor its obligations; thus, it lacks going concern features.
References
DeBoskey, D. G., Luo, Y., & Wang, J. J. (2018). Do specialized board committees impact the transparency of corporate political disclosure? Evidence from S&P 500 companies. Research in Accounting Regulation , 30 (1), 8-19.
Lupulescu, A. M. (2017). Some considerations on the general partnership. Tribuna Juridică , 7 (14), 6-16.
