Corporation and Betty Essay
Tisha Sanders Liberty University Online BUSI561 / Legal Issues in Business November 4, 2012 Starting and Naming a Business Betty Wilson, whom I view as being a mature and respectable Christian, is currently thinking of starting her own company. Betty expressed that she would like to open a Christian Coffee House in her present town of Belmont, NC. Although her husband, John is opened to making a contribution of capital to her business, he is not at all interested in taking part in the company’s operation or management.Betty is unsure at this point as to whether or not she would like to take on perspective partners in her company of if she would rather take on this company as being its sole owner. She has several options that she is considering in operating her new business. Some of those options include the following: operating as a franchise, sole proprietorship, partnership of some sort, a corporation of some sort, as an LLC, and even a joint venture.
She has come to me asking of my input on what I think about her possible start up of this new company.Betty thought about operating her company as a franchise. According to Merriam Webster (2012), “a franchise is when a business grants the right or license to an individual or group to market, sale or distribute that company’s goods or services in a particular territory”. A partnership is identified as an agreement between individuals of two or more to carry on a business as co-owners for profit (Kubasek, Brennan, & Brown, 2012, p. 437).
Some of the advantages include shared management responsibilities and access to more financial resources.The disadvantages are unlimited liability for general partners and disagreements. A corporation is a legal entity that is formed by state law to raise capital by issuing stock to investors. Corporations have several owners, but by law it acts as a single and legal person (Kubasek, Brennan, & Brown, 2012, p. 453). Some of the advantages of a corporation are having more money for investments, limited liability, and separation of ownership and management. The disadvantages include high start-up costs and difficulties in terminations.Limited liability corporations (LLC) is a hybrid corporation partnership which enables entrepreneurs and small business owners to take part in similar limited personal liability the shareholders while also retaining partner status in a partnership (Kubasek, Brennan, & Brown, 2012, p.
469). There are no restrictions on the number of members and no shared liabilities. A joint venture involves two or more business entities who engage in a combined effort for a single transaction or project.
Joint ventures equally share losses and profits in most cases.Joint ventures are normally treated like a partnership for federal income tax purposes. Joint ventures usually only last until the venture is either complete or becomes impossible to complete (Boto, 2012, Slide 8). Given Betty’s situation and how the world of business has become so complicated, more than ever, compared to previous years. I would recommend Betty to take on the simple form of sole proprietorship. Sole proprietorship is the most common form.
It is relatively easy to start and you are your own boss. You answer to no one but yourself.There are no special taxes with sole proprietorship and the best thing is you are able to maintain all of your profit.
However, she will have to keep in mind that she will have unlimited liability, her financial resources will be limited, and she will not have management assistance. She must also take into account that because she is starting a new company, it may be time consuming and will be limited in the growth of her company (Boto, 2012, slide 3). Betty has been approached by several people, such as her sister, Alice and her neighbor, Erma, regarding the possibility of taking part of the start up of her new company.
Her sister, Alice, who is also a new Christian, has stated that she has been looking for an excuse to get out of the house and would love to be a part of the business. However, Alice’s husband, who is also a non-Christian, opposes the idea of his wife’s involvement with the company. He has made it clear that he expects his wife to remain a stay-at-home mother to their teenage children. Betty should think long and hard about accepting her sister as a partner in her company. The fact that her brother-n-law is not supportive f the idea could pose many problems for all of them involved. At this point, Betty does not need any problems or negativity.
Bringing on Alice as a partner would definitely cause chaos, both personally and professionally. This would not be a smart move for Betty. If I were Betty, I would probably talk with Alice and explain to her how I felt from a business perspective and would offer her the opportunity to possibly work with me in her spare time where it would not interfere with her duties as a home maker.
Betty’s neighbor, Erma, who is by the way, not a Christian, has also expressed an interest in participating in the business as a way to earn some extra income. Betty stated that she thinks the “Christian thing” has potential with all the big churches in the area, to include a Mormon temple and a large Kingdom Hall of Jehovah’s Witnesses. I must agree with Betty, from an entrepreneur’s perspective, taking in the fact that not every person drinking coffee is a Christian.If she wants to be a successful business owner, she must look at all religions. She must also factor in all others within the community, which may not necessarily involve those who may be Christians. The question of whether or not Erma is a Christian should not be of a major concern; although it should be taken into consideration, from an ethics and values stance. The concern that I would have with Erma is her reasoning for wanting to go into partnership or participate in the business.
She stated she wanted to earn some extra income.I would consider her interest in wanting to participate, however her participation would be very limited. Earning extra cash can be obtained by doing a variety of things. As this is a brand new business, I would need someone who is dedicated and dependable. I would need someone who is serious about the business, just as I am.
Betty would like to name her company “The Gathering Place”. When choosing a name for a company you have to be very careful. To see the availability of the name, I decided to do a corporate name search on the State of North Carolina database.
It appears the company name “The Gathering Place” has been used several times already. I would advise her to not use this as her company name, however if she did decide to use it, she should personalize it. I would also suggest to Betty, to pray and ask God for guidance with everything concerning this company to include the company name, choosing interested partnerships, workers, and definitely the franchise opportunities, which I would not recommend. I would refer Betty o one of my favorite scriptures in the bible, Proverbs 3:5-6 (NIV), “Trust in the Lord with all your heart and lean not on your own understanding; in all your ways submit to him, and he will make your paths straight”. We must put complete trust and confidence in God that he will guide and see us through. For us to rely on our own understanding would only hinder us. References Biblegateway. com.
(2012). Proverbs 3:5-6 new international version. Retrieved November 3, 2012, from http://www.
biblegateway. com/passage/? search=proverbs%203:5-6&version=NIV Boto, T.C. (2012). Starting and naming a business [PowerPoint slides].
Retrieved from http://bb7. liberty. edu/bbcswebdav/pid-17524108-dt-content-rid-105812227_1/courses/BUSI561_C15_201240/presentations/Module%207/index. html Kubasek, N. K. , Brennan, B. A. , & Browne, M.
N. (2012). The legal environment of business: A critical thinking approach (6th ed.
). Upper Saddle River, NJ: Pearson Education, Inc. Merriam Webster Dictionary. (2012). Franchise.
Retrieved November 3, 2012, from http://www. merriam-webster. com/dictionary/franchise