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Case Study A: What concerns would you have about operating this business as a sole proprietorship if you were Stan? What alternative form of business organization would you recommend and why? In this case Stan is thinking about starting a toxic waste disposal business. He is considering operating this business as a sole proprietorship. Although this is a valid business organization it also carries numerous disadvantages, if not all aspects of the company are taken into account. I will explain some possible conflicts Stan can encounter as a sole proprietorship, and I will recommend an alternative form of business organization that may become more beneficial. After taking into consideration the two different operations I will come to a…show more content…
A second major issue is how Stan can provide the financial issues in order to purchase and maintain a waste disposal location while also running five transportation trucks. Since this is a sole proprietorship, Stan will have to introduce a contract with the bank to help provide the financials. The bank can demand certain terms and conditions were they will be profitable and have certain major influences in the business organization since they provide the loan for the startup of Stan’s business. However if the company becomes unsuccessful or faced with extra expenses and defaults on the contract from the bank, Stan will be faced with the financials that the business may hold. The bank has all rights to take all of the proprietor’s personal assets in order to satisfy the obligations of the debt. He will also have to sign a contract with other employees that he must higher to operate the trucks or work at the site. Sole proprietorship would claim Stan to be accountable for the actions of his employees. These are only a couple of issues that may arise from operating this business as a sole proprietorship. An alternative form of business organization is to run this waste disposal program as a corporation. The organization would provide Stan with limited liability, as well as insurance on the shares of transferrable stock. The company will be given a separate legal standing that gives Stan a limited liability in the chance of a lawsuit if an incident is to occur. If a
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