Choice of Business Organizations
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Choice of Business Organizations
A partnership form of business is where two or more individuals are involved in the formation of a business. In this case, Paige, Phoebe, and Piper believe that general partnership is the best for them. However, I do not agree with them. This is because a general business will not require any formal agreement, which may pose dangers to the existence of the business.
Different merits and demerits can be associated with a general partnership. One of the advantages is that the three will be in a position to share losses in case the business experiences them during worse economic times. Besides, another merit is the exchange of ideas. The partners will be in a position to exchange ideas, which would ensure coming up with the best alternative to resolving issues that emerge (Hillman & Loewenstein, 2015). Also, the partners will have the benefit of employing their different strengths in realizing success. However, there will be a disadvantage of sharing profits. Although different individuals have varied inputs into the business, they would be entitled to sharing profits. Moreover, another disadvantage is that the existence of no formal rules may lead to problems in the sharing of responsibilities and profits (Fontana & Trakin, 2010).
Other options that may be appropriate for Paige, Phoebe, and Piper are forming a limited partnership and a limited company. A limited partnership may be an option for the three since it will provide a formal agreement for the business. Besides, a limited company may be another option as it may provide owners with limited liability.
The best alternative for the three is to form a limited company. The limited company will be the best alternative as it would offer them with limited liability in regard to losses and debts. Besides, the three would have the advantage of sharing profits without double taxation. Moreover, it seems that Phoebe and Piper have some expertise that may be necessary for the formation of a company in the line of automobiles.
References
Fontana, P. K., & Trakin, J. C. (2010). Choosing the right legal form of business: The complete guide to becoming a sole proprietor, partnership, LLC, or corporation. Ocala, Fla: Atlantic Pub. Group.
Hillman, R. W., & Loewenstein, M. J. (2015). Research handbook on partnerships, LLCs and alternative forms of business organizations. Cheltenham: Edward Elgar Pub. Ltd.