Risky Business Case Study

| A general partnership allows for a pooling of capital and talent and a sharing of the risk. Additional benefits to a general partnership include additional expertise in decision making and a sharing of the workload. General partnerships are easy and inexpensive to start up.

Failure to handle these situations properly can lead to huge product liability suits and even bankruptcy.

The individual owner is limited to personal money and loans when it comes to funding the business.

The organizational forms a company might have as it evolves from a start-up to a major corporation are: sole proprietorships, partnerships and corporations. The advantages of a sole proprietorship are that is is easily and inexpensively formed; is subject to few government regulations and it’s income is not

Many believe that liability is a biggest issue in a general partnership than in a sole proprietorship. The owners of the company are still fully liable for any debts the company may accrue as well as the liability for any lawsuits that may be brought against the company. However, the bigger issue in a partnership is that now each partner can be liable for the other partner’s actions. If one partner is sued for malpractice, the other partner may suffer because of it.

Liability- This falls directly on the owner. All debts, liabilities and losses fall on the owner. The owner's assets can be used to alleviate the business's debt.

• Liability: The owner has unlimited liability. When the business fails it is up to the owner to pay all the creditors off.

A Limited Liability Partnership Alternative Security Provision transmittal form must be filed as well. Once these documents are approved, the Secretary of State will return stamped copies of the forms as well as a Certificate of Registration to the partnership.

* An owner has unlimited liability both personally and as the company owner. Liability is a disadvantage in a sole proprietorship.

Liability – There are several liability within sole proprietorship. As the owner you are a

* Unlimited Liability - The liability of the sole proprietor is unlimited. This implies that, in case of loss the

A partnership is a business that has 2 or more people working in it like Starbucks is a business that is in a partnership. The advantages are you have more capita available to you and the company you have combined skills with other workers simple to set up you have tax advantages the disadvantages are unlimited liability you have to share your profit with the other owners you can have conflicts with owners or workers that do not agree partnership ends to death and possible

The advantages to the sole proprietorship are single control over the business and its decisions, easy to start up, less regulations and paperwork burden that the other types of business. The disadvantages are unlimited liability for their company debts and actions. The law does not recognize any distinctions between the owner’s business assets and personal assets. Banks are very skeptical about lending to these types business because there is only one person to hold liable for repaying the debt.

As a corporation, the McGees may be able to find new sources of funds for business development. Many people, including shareholders, could invest in the corporation. Finally, the corporation is the most reliable and trusted form of business entity. A possible downside to incorporation, the McGees may have to put up some of their private assets as a guarantee for the repayment of funds to financial institutions, if they are not found eligible for payment of money. Incorporation is not a small ordeal; it involves many legal formalities, laws, agreement documents, etc. It is necessary to prepare and revue all these documents carefully. Additionally, setting up the corporation will be an expensive task. There are good and bad aspects to a corporation in reference to taxes. With a corporation, the McGees will be taxable for self income, as well as for the corporation's revenue. However they will enjoy personal tax credits as with the sole proprietorship.

Firstly, even though there are different types of partnership such as general, limited and limited liability partnership. This three different type has its advantages and disadvantages however we will be mainly focused on general partnership. One advantage of the general partnership is raising capital due to the nature of the business the partners will raise capital to start-up the business. Therefore more partners mean more capital can be put to the business, this allows the business to have more potential for growth and profitability. Another advantage is that a partnership is less complicated to form and run than a company they don’t have legal filing requirements, this means they don’t have to file accounts and documents with Companies House.