Chapter 20 in Bagley & Savage Subject: Corporate Governance, Ownership, and Control: Forms of Business Organizations (E.G. Sole Proprietorship/Limited Partnership/Llc/Etc....) Ernie Jameson Is a Design Engineer with a

1285 Words Feb 8th, 2015 6 Pages
Jameson's Company chapter 20 in Bagley & Savage

subject: Corporate Governance, Ownership, and Control: Forms of business organizations (e.g. sole proprietorship/limited partnership/llc/etc....)

Ernie Jameson is a design engineer with a proven track record in the field of electronic instruments. He recently designed new VLSI very large scale integrated chip. This chip is meant to be the heart and soul of a digital sampling keyboard to b called Echo. Jameson believes the Echo will set a new industry standard. He wishes to organize a business enterprise to build and market it. He has a meeting with his lawyer and conveys to her the following bits of information:
a. It will take approximately two years to turn the VLSI
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Which one should Jameson choose?

What form of organization should Jameson choose for his new venture?
S corporation

Why? limited liability, lower taxation than C corporation, potential to maintain significant control of the enterprise

What are the advantages and disadvantages of the form you have chosen? Advantages: limited liability lower taxation than a C corporation maintain decision making control Disadvantages:

Be sure to support your views with the facts and the law of Business Organization.

Discuss fully and refer to the readings to support your views.

If Jameson is looking to form a business entity to produce, manufacture, and sell his VLSI chips, he should aim to form an S corporation in order to fulfill his needs of limited liability, significant control, and ability to entice Bernie Lord to be his CEO, while also satisfying the needs of his investors, both presently committed and prospective, that are looking for limited liability, tax breaks, and a quick return on investment.
Jameson and his investors’ needs could be largely satisfied with either an S corporation form of business or a limited liability company (LLC). The partnership of an LLC would allow Jameson to maintain substantial control over his enterprise, and also ”...combines the tax advantages of a pass-through entity with the limited liability advantages of a corporation" (Bagley & Savage, 2010, p.
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