Friday, May 8, 2015

How to Enhance the Life of Registered Organizations?

Accumulations of wealth early became the badge of social distinction. Individuals in certain tribes would accumulate property for years just to create an impression by burning it up on some holiday or by freely distributing it to fellow tribesmen. This made them great men. Even modern peoples revel in the lavish distribution of Christmas gifts, while rich men endow great institutions of philanthropy and learning. Man's technique varies, but his disposition remains quite unchanged.
[The Urantia Book]

Organizations are a collective group of individuals formed for fulfilling certain objectives or aims. It can be formal or informal in nature. 

Registered organizations are formal groups which are registered with the government in accordance with some applicable law.

Examples of organizations are governments, companies, societies, trusts, associations, political parties, etc. In many instances, registered organizations can be deemed as an artificial legal entity, more or less similar to individuals.

For example, a properly set up registered organization can buy or sell properties, have a bank account, can have a permanent account number with regard to income tax or other kind of governmental taxes, sue or get sued for any disputes in a court of law and perhaps many other things similar to what a bonafide individual citizen can do. As compared to individuals, registered organizations can have several advantages and perhaps a few disadvantages. The most important advantage that a registered organization can have is the possibility of its longer life span  as compared to individuals. However, this possibility becomes a reality only when the organizations are set up and run properly.

Just as an individual has some useful life span, organizations also do have some life span. But the life span of organizaions can be easily extended to several individual generations if it is managed well. On the contrary, a badly managed organization might cease to function or disintegrate much earlier than the individuals.  

Theoritically, companies or organizations can exist indefinitely, though it may not be so practical always due to various kinds of conflicts among the people that form organizations. However, it is interesting to note that there are companies in Japan, which have lived more than a 1000 years. A hotel which was believed to be set up in AD 705 called the Nissiyama Onsen Keiunkan is now recognized as the oldest company or organization in the world. 

One of the biggest worries of individuals are about their unknown future. They try to amass wealth or adopt all kinds of greedy hoarding practices because of their fear about the future. Several of the rich individuals who have amassed control over much wealth have no idea about the future of the wealth that they had created. Will their wealth and estates sustain a few generations? Perhaps not. If past history is any indication, most wealthy families disintegrate by the third or fourth generation. Many of the later generations of the past aristocrats and royals either get totally wiped out or turn out to exist in wretched conditions!

The tensions of managing wealth is great in todays world. Many individuals who have painstakingly amassed much wealth are constantly under much tension. Several wealthy individuals have promoted successful companies which in turn have provided much individual wealth to the individuals concerned but enhancing their worries. They have now the wealth of their companies and their own wealth for managing and get worried about. It is reported that the average life span of most companies in the world are much less than what it should be.

The best way to manage a family estate or wealth is by relinquishing  the direct control of wealth by the individual and transfering the same to a registered organization. There are many such people who do this in this manner by creating the so called the family trusts. If done properly, family trusts ensure smooth transfer of wealth to the descendants.

Some very clever people take full advantage of this facility that is available to them legally. I have studied the ways of a few politicians who have no wealth or money of their own, but enjoys all the power and privileges similar to any wealthy person. This is done by becoming a life time worker or functionary of the organization (in this case, a registed political party). The individual does not take or make any money himself or herself in this case. But all his or her expenses are borne by the organization for the life time! The individual concerned also maintains absolute or adequate control over the organization, by the vested powers of the organization as per its bylaws! 

Suppose that you are a person who happens to own an estate which is worth 100 million. As an individual you are bound to pay the estate duties and the income taxes. You are also required to file the returns and occassionally salute the tax officials who might never give the due respect to you for your wealth or money. The wealth and money in this case would become a headache for you. It adds to your worries and tensions deteriorating your health. Additionally you do not know who is the next in line to manage this wealth when you are required to say good bye to this world. Will your wife, your sons or daughters manage your wealth properly? How would they divide the house property among them? Will they remain as a peaceful family with love and affection? You have no clear answers and that too add up to your worries.

Suppose that your wealthy estate is entrusted to an artificially registered organization, say your family trust. The members include you, your family members and perhaps, if you are generous, a few of your friends as well. You manage the trust and appoint yourselves and your family members as its various functionaries or employees. You may even employ outsiders. You make the rules in such a way that you do not take any salary from your trust, but all your expenses are borne by the trust. If required you employ a few managers who would do all the statutory works in connection with the maintenance of your trust. Now you become a free man with least botherations as far as your taxations are concerned. Your organization  may have tax liabilities, but not you!

Ofcourse, you need to know the essentials of managing your organization (the family trust in this case) well. If you do it well, your family trust can have an indefinite life. It could exist for several generations!

Now, the most important aspect of enhancing the life of your registered organization is to ensure that it has the requisite finances for existence. The organization should have the essential minimum income for sustenance. 

Secondly, the rules defining the functioning of the organization (the byelaws) should be made without any ambiguities.

Thirdly, the organization should have a permanent address. The organization should function from its own premises and not from any borrowed or rented address. It should have a permanent records room where all its records are to be maintained.

Lastly and most importantly, the organization should be managed with a liberal but systematic manner with due respect and regard to the law of the land. Under no circumstances, the laws should be violated. In other words, you should not adopt any short cut methods that become a legal botheration in later years.

When these essential things are observed, you can have an organization that can survive a life more than the individuals that form the organization. Such an organization could make the lives of the individuals simpler and more enjoyable.

Don't you think that this is some thing that could be tried?

If you have acquired enough wealth and money, then it is time to think in these lines!

2 comments:

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