- What are Sophia�s options if the Retirement Living partnership cannot pay the $50,000?
- Will Sophia win if she tries to collect the entire debt from Blanche?
- What are Blanche�s options if Sophia sues her for the entire debt?
Analyze the case studies, respond to each of the three questions, and support your responses with
the applicable law and/or text materials.
Case study-business forms
CASE STUDY-BUSINESS FORMS 2
Case study two
The suggestion to establish a partnership type of business formation consisting of
McCoy, Speck, and Kirk is a good one. This is because the three can pull their resources and
work together to achieve their business goals. Moreover, each of them has unique features
which they will bring into the business. For instance, McCoy has money which they can use
to fund their business activities; Spock has the necessary marketing skills which will allow
their partnership of sell their products. Lastly, Kirk brings them a unique product that they
will be selling. Therefore, I feel that a partnership is an excellent idea for them.
Forming partnership by the three partners will be advantageous for them as it is
simple to establish. Moreover, it will be less involving for them to change their legal
structures in future if the market in which they are operating changes (Twomey, 2017). Since
each one of them comes from a unique professional background, a partnership will offer them
a chance to carry out their personal business affairs in private. Lastly, they will be able to
split their income, a fact that will significantly enhance their tax savings (Twomey, 2017).
Since each one of them comes from a unique professional background, a partnership will
offer. However, on the lower side, the three will be fully liable for the debts of the business,
there will also be a risk of conflicts or disagreements between them and in case anyone of
them leaves, they will be forced to value the partnership’s assets, a practice that can be costly.
There are also other types of business formation apart from the partnership as
explained by Twomey, (2017). Since each one of them comes from a unique professional
background, a partnership will offer. This includes limited liability companies and
cooperations. Limited liability companies are known to provide their owners with protection
CASE STUDY-BUSINESS FORMS 3
from business debts. This means that the debts of a business are separate from an
individual’s. Often, their profits flow through the company to the members who also have to
decide if they would like to be taxed as a partnership or cooperation. Cooperation’s also offer
limited liability protection to their members. However, they retain losses and profits at the
cooperate level and are double taxed. Earning is in the form of dividends to shareholders.
Personally, I feel that a limited liability company will be more appropriate for
McCoy, Speck, and Kirk. This is because they will be protected from their business’s debts
and also will have a chance to bring in individuals with skills in management inform of
employees. This is because both the three of them have limited knowledge regarding
Case study three.
There are three business formations that Dan, Roseanne, and Jackie can form. These
are partnerships, limited liability Company, and cooperation. However, from their concerns,
they are not comfortable with a cooperation. This means that they are left with the option of
forming a partnership or a limited liability company.
A partnership refers to a business formation that does not have any legal documents
filed with the state. The running of the formation depends on an agreement between the
forming parties or members. There is no legal formation and partners are responsible for the
debts of the business (Twomey, 2017). Since each one of them comes from a unique
professional background, a partnership will offer. On the other hand, a Limited liability
company provides their owners with protection from company debts. This means that the
debts of the business are separate from an individual. Often, their profits flow through the
CASE STUDY-BUSINESS FORMS 4
company to the members who also have to decide if they would like to be taxed as a
partnership or cooperation.
Regarding the concerns of Dan, Roseanne, and Jackie, a limited liability company
will be more suitable for them. This is because it gives an allowance for each one of them to
address their concerns. For instance, Roseanne’s concerns about high taxation will be sorted
by the fact that a limited liability company requires their owners to choose how they want to
be taxed. In this case, they can file a partnership tax return and be taxed as a partnership. Dan
‘s concern of the paperwork will be limited by the fact that the business will not be in
association with many regulatory authorities which requires constant updating. Lastly,
Jackie’s dislike for many board members will be catered for by the fact that thios type of
formation (LLC) requires a minimum of two directors (Twomey, 2017).). Since each one of
them comes from a unique professional background, a partnership will offer). Therefore, the
three founding members will be the only directors unless they chose to add another person.
CASE STUDY-BUSINESS FORMS 5
Twomey, D. P. (2017). Anderson’s Business Law and the Legal Environment, Comprehensive
Volume, 23rd Edition. [Vital Source Bookshelf